The JSE reached a record high on Friday, rallying along with global markets after a combination of positive US economic indicators this week eased investors’ fears about the economy slipping into a recession.
Retail sales data released on Thursday came stronger than expected, while weekly jobless claims fell. The data comes after inflation numbers this week, which was in line with forecasts,
These positive indicators reinforce the expectation that the Federal Reserve will lower interest rates at its upcoming meeting in September, further calming the fear of an economic downturn that sparked a global market sell-off earlier in August.
Markets are pricing in a 25 basis point (bp) rate cut by the Fed in September, while a 50bp cut was expected last week on the fear the US may be heading for a recession.
As a result, global stocks are rallying, with the Nasdaq ending the overnight session almost 2.5% up, while Dow Jones and the S&P 500 rallied about 1.5% each.
The all share gained more than 1% in intraday trade, reaching the session’s best of 83,169 points — the highest level on record.
“The positive data has eased fears of a hard landing and recession in the US and lifted risk sentiment,” said TreasuryOne currency strategist Andre Cilliers.
At 11.20am, the JSE all share had gained 0.99% to 83,042.36 points and the top 40 0.98%. Retailers had added 1.98%, financials 1.57%, banks 1.53%, SA listed property 1.53%, industrials 0.9%, precious metals 0.24% and resources 0.18%. Industrial metals 0.16%.
At the same time in Europe, the FTSE 100 had lost 0.24%, while France’s CAC 40 gained 0.48% and Germany’s DAX 0.87%.
Earlier in Asia, the Shanghai Composite was little changed, while Hong Kong’s Hang Seng rose 1.81% and Japan’s Nikkei 3.64%.
The rand was on track for its eighth day of gains on Friday, holding steady below R18/$ — having reached an intraday best of R17.8938/$ — the best level since June.
“The improved risk sentiment has pushed emerging-market currencies stronger,” said Cilliers.
At 11.24am, the rand had strengthened 0.4% to R17.9212/$ and 0.25% to R19.688/€, while it was little changed at R23.1144/£. The euro was 0.13% firmer at $1.0985.
Cilliers cautioned that some consolidation and pullback in the rand from current levels ahead of the Jackson Hole central bank symposium next week can be expected.
In commodity markets, gold gained 0.3% to $2,463.09/oz, while platinum lost 0.84% to $947/oz. Brent crude was 1.08% weaker at $80 a barrel.
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