The JSE tracked firmer European and US markets on Thursday, extending the previous session’s gains and seemingly unmoved by the resignation of British Prime Minister Boris Johnson over a string of scandals.
Analysts said Johnson’s departure may spell initial relief for UK assets, which have been battered by the country’s high inflation, weak economy and political uncertainty.
However, they warned it could also have major geopolitical ramifications as Johnson has been a loyal supporter of Ukraine in its war against Russia and a staunch partner of the US and other Western powers as they seek to minimise President Vladimir Putin’s influence on the world stage.
London’s FTSE 100 ended the session 1.14% higher, while the pound was 0.68% firmer against the dollar at $1.2011.Other European markets were also stronger, with Germany’s DAX gaining 1.97% and France’s CAC 40 adding 1.6%.
The minutes of Federal Open Market Committee’s meeting in June that were published overnight indicate the Fed remains on track to lift interest rates as planned — news that markets have already priced in.
“Global stock markets are showing some stability as the Fed’s minutes didn’t add much new information,” said FXTM senior research analyst Lukman Otunuga. “Moves have been very far, very fast, and we may need consolidation.”
The JSE all share gained 3.27% to 67,909.29 points, led by industrial metals, which rose 7.35%, and resources (up 5.21%), while the top 40 added 3.46%.
The focus for investors now turns to US jobs data for June — due on Friday — and US inflation numbers on July 13.
“Friday’s US non-farm payrolls data is an influential release that holds the potential to move markets through reshaping rate expectations if the outcome deviates significantly from expectations,” RMB economists said in a note to clients.
“Specifically, investors will be on the lookout for any signs of momentum loss. Should that be evident, investors will price in a weaker growth outlook, influencing how longer-dated bonds perform.”
In the US, the Dow Jones industrial average was 0.99% firmer at 31,343.89 points at 6.40pm, while the broader S&P 500 was up 1.27%.
The rand made modest gains on the day and by 6.30pm it had firmed 0.42% to R16.741/$ and 0.68% to R16.9921/€, but it was 0.4% weaker at R20.0942/£. The euro was 0.3% weaker at $1.015.
Gold gained 0.14% to $1,740.20/oz and platinum 2.16% to $875. Brent crude rose 6.4% to $106.08 a barrel, but is down 11% so far this month.
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