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Johannesburg - Share prices on the JSE rallied strongly on Wednesday morning in line with world markets as investors pared back expectations on how fast and how far US interest rates might rise this year.
Federal Reserve chair Janet Yellen sent the world markets on a roll when she emphasised in a speech that the Fed will proceed cautiously with further hikes in US interest rates, as global dangers to growth and inflation still need to be considered.
Analysts said Yellen’s speech brought clarity about the Fed’s policy guidelines and was somewhat in contrast to recent remarks by other senior Fed officials, which created expectations of further hikes in US interest rates. Her emphatic tone also established that she wants to control the message and tone done expectations.
Yellen’s comments hurt the dollar with positive results for emerging markets and their currencies, including the rand which at mid-morning on Wednesday traded 1.44% stronger than the previous day at R14.95.
READ: Rand falls below R15/$ for first time since Dec
The stronger rand was also good news for financial shares, which mostly made solid gains and were among the busiest on the JSE on Wednesday.
By mid-morning on Wednesday the All-share index was already 1.46% higher at 52 542 points and the Top 40 index 1.34% stronger at 46 435 points, with the Financial index at that stage 2.31% up. The Industrial index also followed world markets higher and gained 0.47%.
A softer dollar is also good news for commodity prices and the big name resources shares responded positively, with the Resources index 4.05% stronger.
The drop in the US dollar helped oil prices regain a little ground, as did a forecast that US stockpiles may have grown by less than first thought.
Yellen also emphasised that the dollar cannot be allowed to appreciate much further as it will hamper US growth, which provided a further boost for emerging markets like South Africa.
FirstRand [JSE:FSR] was the busiest share on the JSE in terms of volume and more than 6.3 million shares were traded for more than R293m. There was also brisk trade in Standard Bank [JSE:SBK], Old Mutual [JSE:OML] and Sanlam [JSE:SLM].
FirstRand’s share price was also the best performer among the four big banks and traded 4.65% higher at R46.55. Barclays Africa [JSE:BGA] was 3.47% higher at R145.66 and Nedbank [JSE:NED] gained 3.33% to R190.81. Standard Bank was 3.82% higher at R131.62, after the share gained 13.9% over the previous 30 days.
Sanlam continued its strong run of the past month. Before Wednesday Sanlam gained 18.53% over the past month, trading 2.61% higher at R65.19 on Wednesday. At mid-morning Old Mutual was 1.03% stronger at R47.07.
The prospect of lower interest rates is also good news for property shares, and Redefine [JSE:RDF] continued its strong run of the last month. Huge volumes changed hands and the share price, which gained 21.33% over the previous month, traded 0.83% higher at R11.93. The company recently announced large acquisitions in Eastern Europe.
The big commodity shares again rose sharply, with Anglo American [JSE:AGL] the star performer. At mid-morning Anglo was already 7.74% stronger at R114.06 after losing almost as much on Tuesday. BHP Billiton [JSE:BIL] gained 3.99% to R171.47.
Platinum shares were popular, with Anglo American Platinum [JSE:AMS] trading 5.72% higher at R372.15 and Impala Platinum [JSE:IMP] 7.24% up at R45.90.
Steinhoff [JSE:SHF] continued its strong run of recent weeks and traded at a new 52-week high of R96.31, 0.51% up on the previous day’s close. The share is now 21.74% higher than a month ago.
