The US interest rate cut and geopolitical uncertainty have added momentum to the performance of SA Inc this week, pushing the JSE all share index to a record high.
With gains of about 25% so far this year, the all share reached a record 105,899 points on Thursday after the US Federal Reserve announced a 25 basis point cut.
The build-up to this widely expected monetary easing saw gold shoot past $3,700/oz earlier in the week, peaking at a record $3,707.65/oz the day before the cut.
Rate cuts generally make precious metals more attractive by dropping the value of bonds and other interest-bearing assets, with platinum prices also edging up 1.4% on Thursday.
SA’s capital markets tend to enjoy strong investor sentiment at times like these, when US cuts encourage money to flow out of that country and into economies with deep roots in metals and mining.
With gold prices up nearly 40% and platinum 55%, rising metal prices have also given the rand fresh momentum this year, helping it shrug off geopolitical noise and any lingering fears about the government of national unity.
The local currency firmed to R17.26/$ on Wednesday, its best level in 10 months. It is now on track for its best year since the Covid-19 pandemic struck, having strengthened nearly 8% since December after five straight years of decline.
The ongoing precious metal rally more than offset the SA Reserve Bank’s cautious stance at its Thursday monetary policy committee meeting, in which local authorities opted to keep the repo rate at 7% amid inflationary fears stemming from tariffs and higher administered prices.
Despite persistent uncertainty, the Reserve Bank was optimistic about SA’s economic outlook, revising its 2025 growth forecast upward to 1.2% from 0.9% previously. The latest inflation data showed that August’s consumer inflation eased to 3.3% year on year from 3.5% in July, while core inflation remained at 3.1%.
All eyes are now on finance minister Enoch Godongwana’s medium-term budget policy statement on November 12, which should provide further clues to SA’s economic future.
In the meantime, robust dealmaking activity in the local mining sector suggests sentiment continues to be buoyed by rising precious metal prices, which have more than doubled the value of the JSE precious metals & mining index this year.
Most striking was Anglo American’s mega merger with Canadian copper miner Teck Resources to form a $53bn copper giant called Anglo Teck, birthing one of the world’s biggest suppliers of the critical mineral.
Stats SA’s latest GDP data also showed that soaring precious metal prices saw miners driving the country’s economic growth in the second quarter.
With US President Donald Trump’s antics keeping markets on the edge of their seat and experts forecasting more price gains for platinum this year, SA Inc is on track to continue its record breaking rally into the fourth quarter.
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