Share

JSE makes solid gains on Wall Street boost

Johannesburg - The news that the US Federal Reserve has no intention of rising US interest rate anytime soon gave markets worldwide a major boost.

The JSE, which until Wednesday was under severe pressure, made solid gains on Thursday morning in response to Wall Street’s rise on Wednesday, where the Dow Jones recovered by almost 1.5%.

The recovery, described by analysts in New York as a major liftoff, started after the minutes of the latest meeting of the Federal Reserve’s Open Market Committee were released.

The minutes from the Fed's September meeting showed policy-makers are cautious about rushing into rate hikes, and are worried that the dollar is rising too fast.

There was also clear concern over slow growth in Europe and elsewhere.

By midday on Thursday the All-share index was 1.52% higher at 48 764 points, while the Top 40 index improved by 1.55% to 43 509.

All the major indices were higher, with the Gold index rising by 6.67% and the Resources index by 2.47%. The Financial index gained 1.52% and the Industrial index 1.2%.

Markets had a "major liftoff" after the minutes were released, said Michael James, managing director of equity trading at Wedbush Securities in New York.

"Traders' interpretation was that rates are not going to be going up that much or as quickly as maybe people fear," James said.

This news has major implications for the JSE, as the local market is still very dependent on investors in developed countries - where interest rates are at record low levels - who are seeking higher yields in emerging markets.

Fears that stronger growth in the US will force the Fed to raise interest rates, which will lead to an outflow of capital from emerging markets, is one of the reasons why local shares have been under pressure lately.

The prospect of higher rates also pushed the dollar to record heights which had a devastating effect on commodity prices and the gold price, with severe consequences for the share prices of the producers of those commodities.

But the latest minutes indicated that the Fed is not in favour of a strong dollar, as it is concerned that the rising dollar could slow a needed rebound in inflation. Inflation is currently at record low levels in the US and authorities want it higher to stimulate growth.

The strong dollar pushed the rand to its lowest level in eight months, but the unit recovered immediately after the release of the minutes to its highest levels in three weeks on Wednesday and held those levels on Thursday.

READ: Rand holds near 3-week highs on Fed relief

Thursday morning's best performers were the major gold producers, whose share prices all increased by more than 7%. Harmony [JSE:HAR] improved by 7.77% to R23.59, Gold Fields [JSE:GFI] was 7.25% higher at R44.21 and AngloGold Ashanti [JSE:ANG] gained 7.01% to R199.91.

Platinum shares also continued their recovery, which started on Wednesday with Impala Platinum [JSE:IMP] rising 3.29% to R89.99 and Anglo American Platinum [JSE:AMS] increasing by 1.7% to R383.41.

Among the iron producers, which lost more than 40% of their value this year due to a sharp fall in iron ore prices, Kumba Iron Ore [JSE:KIO] recovered by 3.84% to R273.63. Assore [JSE:ASR] was 1.11% stronger at R220.19.

Anglo American [JSE:AGL] rose by 2.03% to R244.50 and BHP Billiton [JSE:BIL] was 2.34% stronger at R303.32.

 - Fin24
We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
18.88
+0.3%
Rand - Pound
23.87
+0.2%
Rand - Euro
20.39
+0.2%
Rand - Aus dollar
12.33
+0.1%
Rand - Yen
0.12
+0.2%
Platinum
908.05
0.0%
Palladium
1,014.94
0.0%
Gold
2,232.75
-0.0%
Silver
24.95
-0.1%
Brent Crude
87.00
+1.8%
Top 40
68,346
0.0%
All Share
74,536
0.0%
Resource 10
57,251
0.0%
Industrial 25
103,936
0.0%
Financial 15
16,502
0.0%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders