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Johannesburg - The strong recovery of share prices on the JSE continued on Friday as the market received support from a stronger rand, continued central bank support for struggling developed economies and a higher oil price.
Although gold and resources shares were lower due to the strong performance by the rand, the major indices were pulled higher by a rally in financial shares, which were more than 2.5% higher by midday.
By midday the All-share-index was again above 49 000 points and traded 0.80% higher on 49 092 points. The Top 40-index was also above 44 000 points and gained 0.74% to 44 080. Both these indices have recovered more than 5% over the past seven days.
At that stage the financial index was 2.57% higher than the previous days, while the industrial index, which represents most of the JSE market capitalisation, traded 0.74% higher.
The gold index, which gained more than 40% over the previous month, was, however, 2.46% softer due to a stronger and an slightly lower gold price. Resources shares traded 1.43% softer.
The rand extended its post-rate hike rally on Friday, gaining another almost 1% against the greenback. This was particularly good news for financial shares which were severely hit by the rand’s demise at the beginning of the year.
READ: Rand extends post-rate hike rally
By early afternoon on Friday the rand was trading at R16.11 to the dollar compared to Thursday's close of R16.19. The unit was trading at R16.33 to a dollar when Reserve Bank governor Lesetja Kganyago was delivering the bank's Monetary Policy Committee's decision to increase local interest rates by 50 basis points.
READ: Sarb hikes interest rate by 50bps
The decision supported the rand as higher rates make South Africa a more attractive destination for investors in developed counties, who are currently earning ultra low returns in their own countries.
The rate differential became even more favourable on Friday morning when the Bank of Japan announced that it is willing to accept negative interest rates in an effort to increase inflation in the Japanese economy. The Federal Reserve has also taken a more dovish stance on future hikes in US interest rates.
The rand has lost just over 4% of its value against the dollar this year, but the unit is a long way away from R17.9950 it reached on January 11 following the fallout of #Nenegate.
The Bank of Japan’s willingness to pump more money in the Japanese economy gave Asian markets also a big push on Friday morning followed by major European markets. The European central bank also indicated recently that it is considering further economic stimulus.
Markets are also supported by the higher oil price, which recovered to more than $34 a barrel on the news that Russia is willing to talk to Opec producers about possible production cuts to eliminate the current glut in the oil market.
READ: Oil up in Asia, analysts temper hopes on Russia-OPEC talks
FirstRand [JSE:FSR] was again the busiest share amongst major bank on Friday and also the best performer, as it traded 5.62% stronger on R44.56. Standard Bank [JSE:SBK] gained 4.38% to R111.69, Nedbank [JSE:NED] traded 2.46% higher on R187.50 and Barclays Africa [JSE:BGA] gained 1.63% to R38.56.
Sanlam [JSE:SLM] was also a solid 4.16% stronger on R58.58 but its main rival Old Mutual [JSE:OML] only gained 1.63% to R38.56.
British American Tobacco [JSE:BTI], the second biggest company on the JSE, was on Friday morning again in record territory. By midday the share traded 1.03% higher on R884.27, which is just below the current high of R884.55, but the share reached an intraday high of R887.20 earlier in the day.
Reinet [JSE:REI], another company in the Rupert stable, was only 0.6% or 2c higher on R33.71 but that was enough to beat the previous best of R33.69.
Bidvest [JSE:BVT], which gained more than 10% over the previous seven days, was another 1.69% higher on a new record of R360.70.
Sasol [JSE:SOL], which gained more than 17% over the past seven days on hopes of a recovery in the oil price, was another 1.62% stronger on R431.89. MTN [JSE:MTN] also continued its strong recovery of more than 10% over the previous seven days and added another 3.32% to R134.63.
Anglo American’s [JSE:AGL] strong recovery of the past week came to and on Friday morning when the share price lost 5.47% to R61.35. The share gained 21.7% over the previous seven days.
The high flyers in the gold sector, Harmony [JSE:HAR] and DRD Gold [JSE:DRD], were both sharply down. Harmony lost 6.94% to R29.21 and DRD Gold traded 5.27% softer on R4.31.
ALSO READ: Gold whipsawed on Japan's surprise rates move
