JSE, rand breathe easier after US gets massive stimulus package
JOHANNESBURG - The JSE and the rand yesterday breathed a sigh of relief following a massive stimulus package by the US government to bolster the world’s largest economy in the midst of the coronavirus.
The rand strengthened slightly by 0.24percent to R17.49 against the dollar at 5pm from a previous close of R17.51.
The FTSE/JSE All Share Index accelerated 5.17percent to 43278.25 and the Top 40 Index rose 5.17percent to 39493.22 points.
Mining stocks surged 7.49percent to 34127.27 points.
Investec’s chief economist Annabel Bishop said the rand took cues from the positive global sentiment.
“The rand has also improved on the patchy, but fractionally better sentiment in global financial markets, as risk aversion has waned slightly,” Bishop said.
“However, the South African Reserve Bank’s (SARB) additional liquidity measures would also have added to the rand strength today.”
Anglo American Platinum (Amplats) led the rally firming 22.57percent to R750.18; Impala Platinum (Implats) 17.44percent to R78.52; AngloGold Ashanti 16.79percent to R362.10; while Gold Fields increased 16.79percent to R106.5; and Harmony Gold 13.86percent to R45.93.
The US Senate yesterday agreed to approve the $2 trillion (R34.8 trillion) stimulus package after days of stalemate.
SARB also eased tensions by saying it would start buying debt in the secondary market to boost liquidity of the struggling financial markets.
Retail stock also advanced 2.26percent to 3128.71; with Shoprite rising 6.04percent to R120.09; Pick * Pay 3.52percent to R64.13; and the Spar Group 3.42percent to R178.74.
Banking stocks followed suit rising 2.91percent to 5074.99 points, with Standard Bank up 4.56percent at R102.14, Capitec 4.38percent to R1000; FirstRand 3.97percent to R40.10; Nedbank 2.93percent R81.24.
Only Absa declined, falling 3.8percent to R76.
The bond yield on South Africa’s R186 reached 10.19percent from 11.20percent, and the yield on the R2030 reached 11.32percent, from 12.38percent as a result.
Bishop said bond yields in South Africa would likely subside further towards pre-crisis levels once SARB begins substantial purchases of government debt across the yield spectrum.
Local businesses have also thrown in their weight behind the lockdown announced by President Cyril Ramaphosa to curb the spread of the Covid-19 from midnight tonight.
South African markets surged as most nations entered into lockdown mode to help curb the spread.
ActivTrades’s Ricardo Evangelista said the markets reacted positively to the latest news of a deal being struck between the White House and Congress.
“Risk-related assets recorded gains and the pound joined the bandwagon,” Evangelista said.
“The question now is will this risk rally be sustainable or will it be diluted amid the expected torrent of negative economic performance indicators that investors will soon be presented with?”