The JSE gained the most in three weeks on Thursday, while the rand touched the strongest level in three months on optimism that the Federal Reserve could be close to wrapping up hiking interest rates.
The Fed kept rates in a range of 5.25% to 5.5% at the conclusion of its latest policy meeting on Wednesday, a move that was widely expected.
The central bank noted that the world’s biggest economy was growing at a “solid pace”. At the media conference after the rate decision announcement, Fed chair Jerome Powell, however, indicated that an interest rate hike at the next meeting would not be ruled out.
On Thursday, data from the US labour department showed labour costs unexpectedly dropped in the third quarter, while private sector payrolls in October came in less than expected.
The data showed easing inflation and a slowing labour market, adding to investor confidence the Fed could be done raising rates, reported Bloomberg.
The key labour market indicator, in the form of the non-farm payroll (NFP) data, will be released on Friday.
“Stocks are rallying as Treasury yields plunge after another soft labour market reading. All the recent labour data points are pointing to a softening of the jobs market,” said Oanda senior market analyst Edward Moya.
“If markets see a soft NFP report on Friday, you can kiss the chance of one more Fed rate hike this cycle goodbye,” said Moya.
The JSE all share rose 2.36% to 71,383 points, with most major indices also higher. The top 40 added 2.43%.
Over in Europe, the Bank of England (BoE) left interest rates unchanged on Thursday, but said monetary policy will probably need to stay restricted for an “extended period of time”.
“It looks clear at this point that the BoE is, like many of its peers, done with the tightening cycle, and it’s now a case of how long it remains at the peak,” said Moya. “Of course, that’s also extremely important at a time when rates are restrictive, and potentially significantly so.”
At 6pm, the Dow Jones industrial average was 1.05% firmer at 33,625 points, while markets were also rallying in Europe.
The rand firmed for a sixth consecutive session, supported by a well-balanced medium-term budget policy statement delivered on Wednesday, and bets that the US Fed might have reached its interest rate hike peak.
At 6.04pm, the rand had strengthened 0.36% to R18.4496/$, having touched an intraday best of R18.3053/$. It had weakened 0.1% to R19.5915/€, while it firmed 0.13% to R22.4602/£.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.