JSE ends week on high note as retailers recover gains
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JOHANNESBURG - THE STOCK market ended this week at more than a year-and a-half high as positive vaccine developments and the prospect of further economic stimulus in the US extended gains in the markets.
The JSE All Share Index rose 0.37 percent to 59 168 points on Friday afternoon while the Top40 Index inched 0.20 percent higher to 53 278 points, the strongest since April last year.
Banking stocks took a queue, with index rising 1.84 to 6 591 points while general retailers shot up 0.93 percent to 4,544 points and financials and industrials 0.70 percent to 7 345 points.
However, the mining index eased 0.21 percent to 54,154 percent.
Anchor Capital’s Peter Little said the UK’s approval of the Pfizer/ BioNtech Covid-19 vaccine rallied the sentiment.
“Markets rallied hard on the news, looking through the fact that new Covid-19 infections were reaching record levels in the US and many parts of Europe and instead focusing on the prospects of normalised economic activity as early as the first half of 2021 as mass vaccination rolls out,” Little said.
Other European countries are set to start rolling out the vaccine early 2021. South Africa, however, is yet to set a date yet as to when the vaccine can be expected. The rand also closed off the week at its strongest on Friday, touching R15.14 at one point in the afternoon after weakening against every single G10 currency over the past five days. The rand had eased by 0.14 percent to R15.19 against the dollar by 3pm, but was better than the R15.48 to the greenback when it closed on Monday.
There have been concerns over a resurgence of Covid-19 cases in some parts of the country and the impact of localised lockdowns on the fragile economic recovery.
FTM’s analyst Lukman Otunuga said this confirmed that appetite towards the local currency remained shaky as anticipation builds ahead of the third-quarter growth figures.
Otunuga said growth was expected to rebound as much as 50 percent quarter-on-quarter due to easing lockdown restrictions and looser monetary policy, but recent retail sales have remained muted.
He said the question on the minds of many investors was whether South Africa would experience a sharp economic rebound in the third quarter.
“It is safe to say that the past few weeks have been incredibly eventful for Africa’s most industrialised economy thanks to two credit downgrades and domestic risks impacting the economic outlook,” Otunuga said.
“Looking closer at the rand, the 0.5 percent appreciation against the king dollar could be misleading given how the local currency has tumbled over 1 percent against the euro and 0.5 percent versus the pound.
“Dollar weakness was a major theme this week amid positive developments on the vaccine front and renewed optimism around US stimulus talks.”
South Africa reported the highest daily increase since midAugust with 4 400 new confirmed Covid-19 cases on Thursday from 4 173 on Wednesday.
President Cyril Ramaphosa announced new localised restrictions with the Nelson Mandela Bay becoming the first area to be declared a coronavirus hot spot.
Investec chief economist Annabel Bishop said the differentiated lockdown restrictions were more sensible than raising restrictions for the whole country.
South Africa’s economy has already been very severely damaged from the harsher curbs to economic activity earlier in the year and unemployment remains very high.
“Further restrictions are likely in South Africa’s hot spots as the festive season gets under way.
“South Africa is likely to continue to risk disruptions from Covid-19 to its economic activities over the first half of 2021,” Bishop said.