The JSE rose above the 60,000-point level and the rand strengthened for a fourth straight session on the first stock trading day of 2021 as a weaker dollar spurred precious metals prices and boosted investor appetite for higher yielding assets.
The rand strengthened against the dollar along with most emerging-market (EM) currencies, while the JSE climbed to its highest in more than two weeks. The price of commodities, which are priced in dollars, rallied as the greenback traded at its weakest level since April 2018.
The JSE all share rose 1.8% to 60,479 points, the highest level since December 18. The top 40 rose 2% to 55,438 points. Index heavyweight Naspers, which comprises about 21% of the measure, added 0.6% to R3,036.95.
At 5.28pm, the rand traded at R14.63/$, R17.96/€ and R19.86/£. The dollar weakened against most EM currencies and all but one of its developed nation counterparts.
“The year has started very much the same as the previous year ended: risk up and the dollar down,” said Stephen Innes, chief global market strategist at Axi. “Dollar weakness remains the dominant theme in EM foreign exchange to start 2021. Gold is the standout mover on the day, hitting its highest level since November 9. The move looks more reflective of a risk-on stimulus trade via a softer dollar than anything else.”
SA stocks and the rand gained even as unions and some of the country’s top healthcare experts lambasted the government for failing to conclude supply agreements with pharmaceutical companies to secure Covid-19 vaccines. At least 29 countries have started inoculating their citizens against the coronavirus while SA, which has had more than 1.1-million cases and almost 30,000 deaths, is only likely to receive its first vaccines by the end of the first quarter.
Major stock indices in the UK and Europe rallied. The S&P 500 fell 0.6% to 3,733 points in early New York trade as investors weighed the rollout of vaccines around the world.
Gold rose to its highest level in almost two months before settling 2.2% higher at $1,940/oz, while platinum jumped 4.6% to $1,121 after earlier rallying to its highest in more than four years. Brent crude gained 0.9% at $52.26 a barrel.
The R2030 government bond firmed for a third consecutive trading session, with the yield falling nine basis points to 8.66%, the lowest level since June. Bond yields move inversely to their prices.
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