JSE rallies to 1-year high on higher gold, platinum prices

Published May 16, 2024


The JSE rallied to its highest level in more than a year yesterday, mirroring its global peers, buoyed by resource-linked stocks on the back of the first monthly decline in US inflation since January.

The all share index rose 0.9% to 79 361 points while the Top40 Index soared 1% to 73 142 points by 5pm, the highest the JSE has been since early February 2023.

Gains in the local bourse were led by heavy metals groups Northam Platinum which rose 5.% followed by Sibanye-Stillwater at 5.5% as gold prices held steady at $2 383 (R43 550.52) per ounce, while platinum also built on previous gain to $1 067 per ounce

Vodacom, Anglo American Platinum and Discovery also saw their share prices rising by 5.4%, 5.2%, and 4.4%, respectively.

Traders were digesting benign economic data from the US, while also monitoring the earnings season globally.

Fresh data from the US indicated cooling inflation and sluggish retail sales, increasing the likelihood of a US Federal Reserve (Fed) interest rate reduction.

Annual inflation rate in the US eased to 3.4% in April 2024 from 3.5% in March, which was the highest reading since September, in line with market forecasts.

The consumer price index report raised hopes among some investors that the Fed may cut interest rates in September.

However, Fed chairperson Jerome Powell this week said that inflation was falling at a slower pace than was widely anticipated and that patience was still needed, confirming that the Fed was likely to keep rates at the current high levels for longer.

Absa Private Wealth Banking’s head of investment solutions, Khanyisa Ngesi, said the oil share in the Top40 had risen two thirds of a percent as the Brent Crude price was above $82 (R1 500) per barrel.

“Gold and platinum are also having a mildly positive day. We are seeing a bit of weakness on our major crosses, namely the US dollar, the pound and the euro against the rand. But if you look at the expectations, the US inflation data is one that the markets are watching quite closely,” Ngesi said.

“The general consensus expects a headline number of 3.4%, core inflation of 3.6%. Why this is important is because it’s going to mark the first monthly decline in inflation since January 2024 this year. If obviously those consensus numbers come to pass, and obviously, this is on the back of the Fed saying that they anticipate rates to remain higher for longer.”

Meanwhile, the rand also strengthened slightly by 0.5% against the US dollar, reaching R18.32 against the greenback by 5pm as emerging markets currencies firmed.

A hotter-than-expected US inflation reading would have likely put the rand under pressure.

“The rand held its own during trade yesterday as it maintained its recent gains and continued to trade rangebound,” said Bianca Botes, director at Citadel Global.