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Johannsburg - The resources sector soared on the JSE on Wednesday morning after the dollar suffered painful losses on news that Federal Reserve hiked interest rates as expected, but signalled no pick-up in the pace of tightening.
The dollar sank to a three-week low against a basket of currencies, which immediately led to a rally in the prices of copper, gold and platinum. Gold enjoyed its biggest daily jump since September.
The result was that the Resources index gained more than 3% in early trade, and the Gold index was more than 6% higher.
By mid-morning African Rainbow Minerals [JSE:ARI], the commodity conglomerate headed by Patrice Motsepe, was already more than 10% higher. Anglo American [JSE:AGL] was more than 6% higher.
The JSE was further supported by strong gains in Asia, which heaved a collective sigh of relief as investors had feared faster US hikes and more political upheaval in Europe could spook funds out of emerging markets.
The Federal Reserve lifted its funds rate by 25 basis points to a range of 0.75% to 1%, but said further increases would only be "gradual".
Crucially, officials stuck to their outlook for two more hikes this year and three more in 2018, when many had expected an accelerated spate of moves. Such an acceleration was already priced into the dollar, which immediately dropped sharply after the Fed poured cold water on these expectations.
The euro also strengthened against the dollar when early results from the Dutch election showed the anti-European Union party of Geert Wilders won fewer seats than expected, soothing fears that public opinion was swinging inexorably towards a break-up of the EU.
The rand also strengthened dramatically against the weaker dollar and at mid-morning was more than 3% firmer on a new 52-week high of R12.74 to the dollar. The unit is currently at the highest level against the dollar since August 4 2015.
READ: Rand rallies as US Fed raises interest rates
A strong rand is normally bad news for the dual-listed shares on the JSE, particularly those which earn most of their income abroad, but all the sectors were swept along by the euphoria in emerging markets as fears about US interest rate increases subsided somewhat.
African Rainbow Minerals, which dropped more than 22% over the past 30 days, traded 10.62% higher at R104.47. Anglo American was again trading above R200 a share and gained 6.55% to R203.50. BHP Billiton [JSE:BIL] was 2.6% higher at R211.30 and Glencore [JSE:GLN] gained 2.98% to R53.24.
Gold shares were sharply higher. Harmony [JSE:HAR] was the strongest mover, gaining 8.32% to R30.85, and AngloGold Ashanti [JSE:AGL] traded 7.02% higher at R139.93. Sibanye [JSE:SGL] gained 6.64% to R26.50 and Gold Fields [JSE:GFI] 6.93% to R43.33.
Gold shares have been sharply down over the past 90 days with Gold Fields losing 43.3%, Harmony 37.2%, Sibanye 36.9% and AngloGold Ashanti 23.2%.
With the platinum price more than 3% higher at $964 per ounce, platinum shares also moved strongly. Anglo American Platinum [JSE:AMS] was 5.01% stronger at R294.72 and Impala Platinum [JSE:IMP] 2.8% higher at R41.89. Eastern Platinum [JSE:EPS], which lost almost half of its value over the past six months, soared and gained 35.5% to trade at R5.15.
Standard Bank [JSE:SBK] reached a new 52-week high, trading 1.92% up to R160.21. The banking group strengthened more than 9% over the previous 30 days.
Sanlam [JSE:SLM] gained 4.91% to a new 52-week high of R73.26, and Discovery [JSE:DSY] was also at yet another high when it gained 2.58% to R136.30. Before Thursday's trade, Sanlam was already more than 11% higher over the past month and Discovery more than 15% up.
