Local stocks rally buoyed by global growth, metals
JOHANNESBURG - STOCKS on the JSE rose at to more than a one-month high on Friday, buoyed by precious metals after economic data from China and the US, two of the world’s largest economies, indicated a rebound in global growth.
The JSE All Share Index traded 1.26 percent higher to 68 687 index points, its highest level since March 11 as risk appetite was supported by strong economic numbers from both the US and China. The all share index closed at 67 812.15 points, up 1.1 percent, while the Top40 index closed at 62 084.39, points up 1.14 percent.
The precious metals and mining index rose more than 3 percent to 65 411 points as investors China and the US were showing signs of a quicker-than-expected recovery.
China on Friday posted its highest-ever recorded growth of 18.3 percent in the first quarter, accelerating sharply from a 6.5 percent growth in the fourth quarter.
At the same time, US retail sales jumped 9.8 percent in March as consumers use stimulus checks to spend heavily, while jobless claims dropped last week to a one-year low.
FXTM’s market analyst Han Tan said the risk appetite was reliant on sustained global economic reopening. Tan said the markets were cheering signs that the US economy was well and truly getting back on its feet since the pandemic.
“China’s stellar economic prints, coupled with better-than-expected data out of the US, shows the global economic recovery is gathering momentum and such prospects appear to justify the bullish prospects for risk assets moving forward,” Tan said.
Meanwhile, the rand was not the best emerging markets currency performer on Friday, as investors continue to monitor the earnings reports alongside Covid-19 numbers.
Health Minister Dr Zweli Mkhize has launched the Electronic Vaccination Data System for the second phase of the vaccine rollout, which is expected to start in May.
The rand dipped to R14.31 against the dollar on Friday, from a strong rally of R14.18 to the greenback on Thursday. By 5pm the rand was trading at R14.40, up R0.17 from the previous day’s close.
However, analysts were seeing the current rand strength as surprising on the upside.
Anchor Capital’s Nolan Wapenaar said the rand has long been a favourite investment destination for traders who will feel emboldened to increase their exposure to the currencies of those countries where interest rates are above zero.
Wapenaar said the consensus view on the reopening of economies was that the commodity rally still has legs, and therefore investments in South Africa will remain attractive.
“Combining these two themes means that the rand will see some offshore support for a while.
“Our view is also that the short-term momentum which is strengthening the rand is strong and we believe that it is certainly possible that the local unit will test levels stronger than R14.00 against the US dollar.”