Johannesburg - The JSE opened firmly in the black on Monday morning
boosted by the results of European bank stress tests late
Friday, which
indicted that only a handful of relatively small banks in the region would be
required to raise new capital to weather a potential economic downturn.
By
09:16 local time the JSE all share index had risen 0.89%, as resources gained
1.19%, platinum miners climbed 1.17%, and gold miners added 1.20%. Banks picked
up 0.94%, financials profited 0.83% and industrials firmed 0.59%.
The rand was bid at R7.37 to the dollar from R7.42 at the JSE's close on Friday. Gold was
quoted at $1 193.58 a troy ounce from $1 190.22/oz at the JSE's previous
close, while platinum was at $1 552.50/oz from $1 542/oz before.
A
local trader said: "Markets are benefiting from the results of stress tests done on
European banks on Friday. The Dow reacted positively to the news when it came
out, with Europe and the local bourse following suit this morning. There is
some concern that the tests aren't stringent enough, but that is more a longer
term worry."
He
added that the local bourse had not reacted to the strong rand.
European stock markets opened a touch higher on Monday, as market participants reacted
with relief to Friday's release of European bank stress tests. However, these
gains could be limited amid a degree of scepticism over the rigor of the
tests, Dow Jones Newswires reported.
The tests, conducted on 91 banks in the region by the Committee of European Banking
Supervisors, found that only seven, relatively small banks would have to raise
new capital to weather a potential economic downturn.
The "as expected" verdicts in the stress tests will help bed in some confidence, as a
clean bill of health for all 91 of the institutions tested could have been
catastrophic, said Cameron Peacock, a market analyst with IG Markets.
However, the inevitable feeling that the tests were too lenient will be the dominating force
today and the unpicking of the results can begin, said James Hughes, an
analyst at CMC Markets. But "despite the cynicism, the stress tests results
are likely to help European indexes add to gains this morning and start the
week off on a positive footing."
Looking ahead, there is little in the way of eurozone economic data due for release during
the session, so the market will focus on US new home sales data at 14:00 GMT.
On
Wall Street on Friday, stocks jumped as investors moved past the results of European bank
stress tests to focus on some better-than-expected earnings.
The strength on Wall Street helped Asian stock markets move mostly higher on Monday.
"Relief over the (bank test) results may last for this week, but it is possible
doubts will later increase on whether the tests were sufficient,"
said Yutaka Yoshii, general manager at Mito Securities.
Nonetheless, Japan's Nikkei Stock Average was up 0.9%, while South Korea's Kospi
Composite was up 0.4%. China's Shanghai Composite Index gained 0.5%, and Hong Kong's
Hang Seng Index climbed 0.2%.
- I-Net Bridge