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Johannesburg - The JSE was one of the big benefactors on Thursday as the dollar’s efforts to break out from a three-month low stalled after Federal Reserve minutes indicated officials are divided over the urgency to raise interest rates.
All major indices on the JSE were significantly higher after the possibility of an earlier than expected hike in US interest rates was diminished by the Fed’s latest minutes.
Some dovish comments by senior Federal Reserve officials on Tuesday created the impression that US interest rates might rise as earlier in September, with positive results for the dollar but a detrimental effect on the rand and the JSE.
However, the Fed’s minutes showed on Wednesday that US policy makers were divided in July over the timing of future rate increases, though they agreed to wait for more economic data before making any move. Angus Nicholson, a market analyst at IG in Melbourne, told Reuters there is now increasing doubt that a US rate hike in December may even happen.
That stopped the dollar’s short-lived recovery in its tracks and the rand recovered by 0.41% to R13.34 per dollar. The Bloomberg Dollar Spot Index, which tracks the US currency against 10 major peers, is now at its lowest level since May.
READ: Rand goes below R13.30/$, but when will the party end?
The softer dollar gave commodity prices a lift and resources shares rallied strongly on the London Stock Exchange, also boosting the Resources index on the JSE. Financial shares on the JSE also benefited from the stronger rand and satisfactory results from Standard Bank [JSE:SBK].
By mid-morning the All-share index was already 1.03% higher at 52 849 points, with the Top 40 index trading 1.12% firmer at 45 896 points. The Resources index was at that stage 2.31% higher and the Gold index had gained 2.21%. The Financial index was 1.69% stronger and the Industrial index had improved 0.61%.
Most world markets were also higher, as investors are now again hoping for more stimulatory measures from the world’s top central banks to support global growth. European stocks climbed for the first time in five days, rebounding from a two-week low, and some emerging markets in Asia were back on a one-year high.
The dual-listed commodity shares repeated their strong performance in London on the JSE, with BHP Billiton [JSE:BIL] gaining 3% to R187.97. Anglo American [JSE:AGL] was 2.87% higher at R34.54 and Glencore [JSE:GLN] rose 2.8% to R36.81. South 32 [JSE:S32], which was unbundled from BHP Billiton earlier this year, traded 3.30% higher at a new 52-week high of R21.42.
Among the local shares ArcelorMittal [JSE:ACL] was 4.48% higher, but Kumba Iron Ore [JSE:KIO] shed 1.98% to R136.97.
The financial sector's focus was on Standard Bank, which increased its dividend by 12% to R3.40 a share. Investors reacted positively to the news and the stock rose 4.87% to R149.56. Before Thursday’s trade the share price was 16.03% higher over the past 30 days.
Although first-half net income dropped 18%, earnings per share - excluding one-time items - advanced 5% to R6.80. In the first half of 2015 there was R2.8bn of non-recurring gains in its net income, mainly related to the sale of a stake in its UK business.
The other top banks, which all made significant gains over the past month, also traded higher. Barclays Africa [JSE:BGA] gained 2.04% to R163.27 and Nedbank [JSE:NED] lifted 2.23% to R224.20. FirstRand [JSE:FSR] was 1.79% stronger at R49.98.
Gains in the insurance sector were far more modest. Sanlam [JSE:SLM] was 0.84% higher at R67.540 and Old Mutual [JSE:OML] 0.77% stronger at R36.81.
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