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Johannbesburg - US Federal Reserve chairperson Janet Yellen set world markets, including the JSE, on a record-breaking run when she indicated on Wednesday night that interest rates in the US will remain ultra-low for a long time to come.
Not only did the Standard and Poor’s index close at a record high on Wednesday night, but the JSE's All-share index flew past the 51 000 mark into record territory on Thursday morning.
In Europe and Asia shares were also higher, with London's FTSE index close to previous highs.
By midday on Thursday the All-share index was 0.83% higher at 51 114, and the Top 40-index passed 46 000 to a new high of 46 133, 0.90% higher than Wednesday.
Resources shares were the best performers, with the Resource 10-index 1.40% and the gold index 1.48% higher respectively. The Financial index improved by 1% despite Standard and Poor’s downgrade of the credit ratings of the big four banks, in line with SA's own credit rating drop.
Standard and Poor’s said the South African banks whose credit ratings were downgraded remain financially sound and are not viewed as non-investment or ‘junk’ grade.
Most activities were in the bigger shares and the Industrial index improved by 0.59% by midday on Thursday.
All three indices on Wall Street rose on Thursday night after the Fed issued a statement on Wednesday at 18:00 GMT, reiterating its policy of tapering stimulus while keeping monetary policy "highly accommodative".
The gains became more pronounced throughout a press conference with Yellen that began half an hour later.
Yellen told reporters there is "no mechanical formula" for when the Fed will lift benchmark interest rates following the end of stimulus, suggesting the central bank's timeframe for the hike remains in the middle of 2015.
The implications of her remarks are enormous for share markets and particularly the JSE. Current record levels are mainly due to investors from developed countries seeking higher yield alternatives than those available their in own countries, where interest rates are ultra low.
There were fears that the Fed would start raising interest rates when the tapering of its stimulus programme was complete, particularly as there are signs that the US economy is beginning to recover which could lead to higher inflation.
Good new for stock markets everywhere
It now seems that interest rates will remain unchanged for up to a year, which is good news for stock markets everywhere.
There was much interest in stocks with big market capitalisations and the busiest share in terms of value was Naspers, which traded shares to the value of R2.49bn on Thursday morning. The share price rose by 1.91% to R1 266.25.
Second on the list was BHP Billiton, with transactions valued at R1.79bn on Thursday morning. The share price gained 1.85% to R347.12. Anglo American strengthened by 2.13% to R265.70, while in the gold sector Harmony improved by 2.49% to R30.04.
Sasol, which benefits from a higher oil price due to political uncertainty in Iraq, was 0.07% higher at R640.16 and is now fast approaching the record of R645.10.
The one big share that did not respond much was SABMiller, which was only 0.01% higher at R620.55, despite high volumes.
Among the telecom shares MTN improved by 0.68% to R228.54 and Vodocam was 1.18% higher at R130.02. Investors are still banking on Telkom’s turnaround potential and low price to earnings ratio, and the share rose 0.34% to a new 52-week high of R44.65.
Not only did the Standard and Poor’s index close at a record high on Wednesday night, but the JSE's All-share index flew past the 51 000 mark into record territory on Thursday morning.
In Europe and Asia shares were also higher, with London's FTSE index close to previous highs.
By midday on Thursday the All-share index was 0.83% higher at 51 114, and the Top 40-index passed 46 000 to a new high of 46 133, 0.90% higher than Wednesday.
Resources shares were the best performers, with the Resource 10-index 1.40% and the gold index 1.48% higher respectively. The Financial index improved by 1% despite Standard and Poor’s downgrade of the credit ratings of the big four banks, in line with SA's own credit rating drop.
Standard and Poor’s said the South African banks whose credit ratings were downgraded remain financially sound and are not viewed as non-investment or ‘junk’ grade.
Most activities were in the bigger shares and the Industrial index improved by 0.59% by midday on Thursday.
All three indices on Wall Street rose on Thursday night after the Fed issued a statement on Wednesday at 18:00 GMT, reiterating its policy of tapering stimulus while keeping monetary policy "highly accommodative".
The gains became more pronounced throughout a press conference with Yellen that began half an hour later.
Yellen told reporters there is "no mechanical formula" for when the Fed will lift benchmark interest rates following the end of stimulus, suggesting the central bank's timeframe for the hike remains in the middle of 2015.
The implications of her remarks are enormous for share markets and particularly the JSE. Current record levels are mainly due to investors from developed countries seeking higher yield alternatives than those available their in own countries, where interest rates are ultra low.
There were fears that the Fed would start raising interest rates when the tapering of its stimulus programme was complete, particularly as there are signs that the US economy is beginning to recover which could lead to higher inflation.
Good new for stock markets everywhere
It now seems that interest rates will remain unchanged for up to a year, which is good news for stock markets everywhere.
There was much interest in stocks with big market capitalisations and the busiest share in terms of value was Naspers, which traded shares to the value of R2.49bn on Thursday morning. The share price rose by 1.91% to R1 266.25.
Second on the list was BHP Billiton, with transactions valued at R1.79bn on Thursday morning. The share price gained 1.85% to R347.12. Anglo American strengthened by 2.13% to R265.70, while in the gold sector Harmony improved by 2.49% to R30.04.
Sasol, which benefits from a higher oil price due to political uncertainty in Iraq, was 0.07% higher at R640.16 and is now fast approaching the record of R645.10.
The one big share that did not respond much was SABMiller, which was only 0.01% higher at R620.55, despite high volumes.
Among the telecom shares MTN improved by 0.68% to R228.54 and Vodocam was 1.18% higher at R130.02. Investors are still banking on Telkom’s turnaround potential and low price to earnings ratio, and the share rose 0.34% to a new 52-week high of R44.65.
