The Johannesburg Stock Exchange. File picture: Siphiwe Sibeko
JOHANNESBURG - South Africa's stocks rallied yesterday, closing the day at a record high of 61474 points, with the key banks index leading the charge up 2.49percent on the day.

The JSE’s blue chip top 40 index gained 0.66percent to 54521.81 points, while the all share index inched up 0.68percent to 61475.44 points.

As expected, the local bourse opened sharply higher with the all share index opening at 61342 points on account of surging Asian spot equity markets in overnight trade, after the US Congress voted in favour of ending the three-day government shutdown. The banking sector benefited from a firm rand and improved political sentiment in the country.

Roy Topol, a portfolio manager at Old Mutual, said the banking sector had shown an incredible turnaround this year.

“If you had invested in the JSE banks index exactly two years ago, you would have been up 74percent yesterday in rand terms and if you were a foreigner, your return would have been up 138percent in dollar terms,” Topol said.

Leading the banking stocks was FirstRand, which gained 3.95percent to R69.13, followed by Barclays Africa, which climbed 3.38percent to R189.19. Standard Bank rose 1.55percent to R203 and Nedbank added 1.89percent to R270.50.

Other financial services stocks also enjoyed a stellar trading session. MMI Holdings ended the trading session up 4.48percent to R23.30 while Sanlam closed the day up 3.33percent to R90.20. Sygnia surged 8.55percent to R13.20. Old Mutual was little moved, up 0.7percent to R40.08.

The JSE’s buoyant performance yesterday mirrored the rally of world stocks as relief at a temporary US government funding deal boosted already bullish confidence about global growth and corporate earnings.

This, however, hurt resources stocks, with the resources index down 1.75percent by the close of business.

Exxaro led the bloodbath in the resources sector, shedding 5.20percent to R148.99, followed by Kumba Iron Ore which lost 4.3percent to R358. Anglo American was down 3.22percent to R291.32.

Dave Mohr, the chief investment strategist, at Old Mutual Multi-Managers, said at the start of 2018 the global backdrop continued to appear supportive for equities.

“The local market follows what happens globally, but some domestically focused sectors could outperform if the local economy picks up steam. With a conservative central bank, a benign inflation outlook and high rates, domestic fixed interest remains attractive,” Mohr said.

Global banking leaders yesterday raised concerns that the bullish global equities market could be stymied by central banks beginning to raise interest rates that have remained low in the wake of the 208 global financial crises.

Last week, the SA Reserve Bank held its key rate at 6.75percent, but a dovish tone suggests that they have abandoned November’s tightening bias.

In contrast, major economies have been taking hawkish monetary policies in recent months.

Rating agency Fitch earlier this month warned that interest rates could shoot up much faster than expected over the next 18 months, stunning markets and delivering a sharp shock to borrowers.