The JSE’s precious metals and mining index jumped the most in almost two years on Thursday, powered by the flight to safe-haven assets in the wake of Russia’s invasion of Ukraine.
Gold surged to the highest since September 2020 as Russian forces attacked targets across its southwestern neighbour, triggering the worst security crisis in Europe since World War 2 and crushing risk appetite.
Spot bullion jumped to $1,973,80 in intraday trading — the highest since August 2020, having broken above $1.900 for the first time last Thursday. Brent crude surpassed $100 a barrel and soft commodities, including wheat — a major Ukrainian export — also rose.
The JSE tracked sharply weaker global markets, ending the day down 1.57% at 73,674.65 points, while the top 40 tumbled 1.69%. All the markets sub-indices were lower, except for precious metals & mining and resources, which rose 8.07% and 1.79%, respectively.
Among individual stocks, Impala Platinum leapt 11.6% to R280, the most since April 2020. It was followed by Harmony Gold, which soared 9.54% to R64.56, and Sibanye-Stillwater which added 8.24% to R69.25.
“The ordered Russian military action on Ukraine has sent commodity prices soaring, including PGMs lift as well as safe-haven assets,” RMB financial markets research team said in a note.
“While markets had broadly factored in Russian-Ukraine geopolitical tension, the recent surge in [commodity] prices suggests that the market may be in flux over the next few weeks,” the team added.
“The spillover effect on several African countries will be seen primarily through the inflation channel as key commodity prices remain elevated. We are further concerned about currency volatility as markets divert to safe-haven assets.”
Russia’s military action prompted international condemnation and threats of further sanctions against the Kremlin. European leaders are meeting later on Thursday to discuss what European Commission president Ursula von der Leyen called a “package of massive, targeted sanctions”.
At 7.24pm, the Dow Jones industrial average was 2.08% weaker at 32,443.50 points, while the S&P 500 was down 1.47%. In Europe, London’s FTSE 100 slumped 3.88% to 7,207.01 points, Germany’s DAX lost 3.96% and France’s CAC 40 3.83.
The rand fell to a two-week low on the day, weakening along with its emerging-market peers. It reached an intraday low R15.5270/$, just a week after strengthening to R14.92/$.
At 7.10pm, the unit had weakened 2.36% to R15.4317/$, 1.03% to R17.2469/€ and 0.82% to R20.6477/£. The euro was 1.49% softer at $1.1141.
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