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Johannesburg - The JSE joined the rally on global stock markets on Tuesday morning, with all major indices substantially higher by mid-morning.
The rally started overnight on Wall Street where the three major US indices - the Dow Jones, Standard & Poor's and Nasdaq - all closed on record highs. Asian stocks rose to one-week highs on Tuesday and European markets opened higher, following Monday’s gains.
The All-share index traded above 51 000 for the first time in November when it gained 1.23% to 51 221 points by mid-morning on Tuesday. The Top 40 index was at that stage 1.33% stronger at 44 757 points.
The market was pulled higher by the resources index, which gained 2.7% by mid-morning on the back of a stronger oil price and the upward tendency in commodity prices. The fact that the dollar consolidated at current levels also supported commodities.
The strong gains in the oil price gave major markets a big boost, with firm gains in energy company stocks. The oil price consolidated its gains on Tuesday after prices surged 4% to a three-week high on Monday, after comments from Russian President Vladimir Putin raised hopes of a deal to curb production next week.
The biggest energy company on the JSE, Sasol [JSE:SOL], traded a solid 2.25% higher at R385.98, while BHP Billiton [JSE:BIL], which also has interests in oil and gas production, gained 2.62% to R232.85.
Global markets are still driven by expectations that Donald Trump's administration will adopt expansionary fiscal policies which would fuel inflation and lead to higher interest rates, which pushed up bond yields and strengthened the dollar.
Investors are selling bonds and buying shares. Data showed investors moved $45.7bn into US-listed equity exchange-traded funds in the eight trading days ended Thursday, the biggest eight-session inflow on record.
The markets however did not respond to Trump’s announcement on Monday that he will withdraw the United States from the Trans-Pacific Partnership free trade accord on his first day in office.
Among the other top resources shares, Anglo American [JSE:AGL] traded 4.70% higher at R208.33 and Glencore [JSE:GLN] was 2.14% stronger at R49.09.
Kumba [JSE:KIO], which is now an incredible 335% higher for the year to date after trading as low as R25.35 in early January, was 2.15% firmer at R163.99.
The Industrial index was 0.63% higher, despite a stronger rand which gained more than 3% to R14.13 per dollar at mid-morning. Naspers [JSE:NPN] was 0.95% up at R2 184.50, but Richemont [JSE:CFR] lost 2.62% to R90.32 on investor concern over the market for luxury watches. The group said last week it plans to cut more than 200 watch-making jobs in Switzerland as the jeweller scales back further in response to weakening demand.
In the Financial index, Old Mutual [JSE:OML] continued its recovery of the past few days and gained 0.93% to R33.51. The share is however still more than 14% lower over the previous 90 days.
The good mood on the markets also supported retail shares, which have been under pressure recently. Mr. Price [JSE:MRP] was 3.2% stronger at R142.42 and Woolworths [JSE:WHL] gained 1.43% to R66.70.
