SA markets muscle higher
JOHANNESBURG - South African markets muscled higher yesterday with the rand strengthening further powered by gains in gold mining sector stocks following the swearing-in of US President Joe Biden’s administration.
The markets have been on a risk-on mode since US Treasury Secretary nominee Janet Yellen advocated for a large fiscal relief package to mitigate the adverse effects of the Covid-19 pandemic.
The JSE All Share Index rose close to an all-time high of 64 512 points in earlier trade, before settling 0.1 percent higher to 64 174.88 points as interest rates were kept unchanged.
The Top40 Index followed suit and rose 0.19 percent to 58 969 points, boosted by mining and general retailers stocks.
The mining index rose 0.94 percent to 60 878 points while the general retailers index was 0.4 percent higher to 4 769 points.
The Reserve Bank kept lending rates at record lows of 3.5 percent and projected a smaller economic contraction of 7.1 percent this year than what it previously estimated in November.
Consumer price inflation fell to its lowest rate on an annual basis in 16 years as the Covid-19 pandemic put a pressure on consumer spending as well as on fuel prices.
The rand rallied for the fourth day in a row, strengthening 0.09 percent to R14.82 against the dollar by 5pm, while slightly gaining 0.01 percent to R20.35 against the pound.
However, the rand remained unchanged at R18.01 against the euro.
TreasuryONE’s currency risk strategist Andre Cilliers said the general sentiment sweeping the global markets was that Biden’s leadership of the US was positive for emerging markets.
“The risk-on sentiment remains in place for now with emerging markets currencies consolidating at their firmer levels and settling into new trading ranges,” Cilliers said.
“The hopes of increased stimulus and a vaccine driven recovery in economies are partly off-setting pandemic worries.”
The US President also spoke of the need for unity, while pledging to fight for racial justice and to reject extremists and white supremacy.
Biden has already announced a $1.9 trillion stimulus plan which includes extra $1 400 checks for most Americans and a rise in the federal minimum wage to $15 an hour.
However, doubts remain over whether Congress will pass the package and coronavirus infections continue to rise around the world.