Stocks on the JSE surged to a four-month high yesterday driven up by top-performing resource-linked stocks and financials while the rand also firmed strongly to a two-week high.
The JSE all share index rose more than 1.1% to 76 249 index points, its highest since late December 2023, tracking major global peers.
MTN and Anglo American Platinum rose more than 4% while Discovery, South32, and Super Group were more than 3% higher yesterday.
Traders have been monitoring more corporate earnings while awaiting the US Federal Reserve’s policy decision later this week, as well as crucial monthly US job figures.
Meanwhile, the rand managed to gain back lost ground during trade on Friday in line with the softer US dollar.
The rand strengthened by 0.7% to R18.68 against the dollar by 5pm, its highest since April 11, after easing below R18.80/$1 at the end of last week as the greenback lost some strength ahead of the Fed’s two-day policy meeting.
The Fed’s narrative of “higher-for-longer” interest rates is set to be reiterated, given indications of persistent inflation and a robust US economy.
In its latest Monetary Policy Review, the South African Reserve Bank (SARB) noted that the path back to 4.5% inflation would probably be “bumpy and protracted” after setbacks in the disinflation trajectory in recent months.
As a result, headline inflation is only expected to return to the midpoint of the target band in the last quarter of 2025.
The latest data from Statistics SA showed annual consumer price inflation slowed to 5.3% in March from 5.6% in February, but risks to the outlook remain on the upside.
Inflation has been above the 4.5% midpoint of the central bank’s target range since May 2021. The SARB prefers to anchor expectations around the midpoint target range.
Investec chief economist Annabel Bishop said the rand had gained moderately as the US saw a weaker GDP outcome than was expected.
Bishop said although the latest poll from Ipsos continued to show the governing ANC below majority at 40.2%, the local political and economic developments had no impact on the rand.
“The US interest rate expectation volatility has mainly driven movements in the domestic currency, weakening the rand, while domestically political polls show differencing voter support levels for the SA 29th May elections, undermining the rand,” Bishop said.
“However, the rand is mainly driven by international events, particularly financial market events in the US. The start of a sustained US interest rate cutting cycle would be the most significant factor in causing the rand to strengthen back to its purchasing power parity value.”
BUSINESS REPORT