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Johannesburg - The JSE rallied on Thursday, a day after the US Federal Reserve announced a new round of quantitative easing (QE2) measures that were well ahead of expectations, boosting equities around the world.
Local mining stocks led the rally as investors dumped the dollar in favour of commodities and equities.
The benchmark index broke through a key technical resistance level, moving above the 31,000 mark, Kevin Algeo, portfolio manager at Imara SP Reid, said, adding that this is a bullish sign.
By 17:00 local time the JSE all share index was up 1.65%, with platinum miners surging 4.08%, gold stocks gaining 2.25% and resources climbing 3.58%. Industrials rose 0.22%, financials firmed 0.83% higher and banks advanced 1.39%.
The rand was bid at 6.78 to the dollar from at 6.91 at the JSE's close on Wednesday. Gold was quoted at US$1 380.68 a troy ounce from $1 332.21/oz at the JSE's previous close, while platinum was at $1 749.50/oz from $1 696.00/oz before.
Following the Fed's move on Wednesday, the dollar continued to weaken against major currencies, especially the euro, sparking an increase in commodity prices, Algeo said.
Algeo said BHP Billiton shares [JSE:BIL] surged over 6% as investors expected the miner to drop its bid for Potash and return cash to investors via share buybacks or a special dividend.
Dow Jones Newswires reported that US stocks soared on Thursday as the Federal Reserve's latest efforts to stimulate the sagging economy were greeted warmly by investors.
The Dow Jones Industrial Average surged 169 points, or 1.5%, to 11 384.
Investors pushed stocks higher as they digested the Fed's announced plans on Wednesday to purchase an additional $600bn of longer-term Treasury securities by June, a pace of about $75bn per month.
The central bank also will keep reinvesting principal payments from its securities holdings.
"Investors love the size of the Fed's QE2 announcement," said David Carter, chief investment officer at Lenox Advisors. But he cautioned that the Fed's action suggests the economy is still in dire need of additional help to boost the recovery.
"Nobody knows if this QE2 thing is going to work," he added. "But the market is saying it's showtime and lets see what it can do."
