JSE closes firmer as safe-haven gold gains

The JSE closed higher for a second straight day on Friday as global markets shrugged off the escalation in the conflict in the Middle East.

Equity markets’ response was muted to news of a sharp escalation of tension in the Middle East. The US and Britain launched strikes from the air and sea against Houthi military targets in Yemen in response to the group’s attacks on ships in the Red Sea, a dramatic regional widening of the Israel-Hamas war in Gaza, Reuters reported.

Oil and gold were the main beneficiaries of the latest developments in the region. At 5.20pm, gold was 1.39% higher at $2,056.82/oz, reflecting its safe-haven appeal, while Brent crude added 1.09% to $79.42 a barrel. Platinum was up 2.72% to $932.73/oz.

The JSE all share index closed up 0.55% at 74,240.76 points, while the top 40 added 0.69%. The precious metals and mining index advanced 4.15% and resources rose 2.17%.

Gold shares Gold Fields and Harmony were features on Friday as the gold price advanced. Gold Fields was up 5.63% to R245.97, while Harmony added 5.82% to R112.30. Platinum counter Anglo American Platinum advanced 4.9% to R883.32.

Stocks have had a relatively inauspicious start to the year after a strong showing in December, and with very little local company news to drive markets investors have focused on the global interest rates trajectory and geopolitical tension in the Middle East.

A softer-than-expected US inflation report on Friday that boosted bets for early rate cuts was overshadowed by weak earnings reports from big US banks, Reuters reported. The US producer price index dipped 0.1% on a monthly basis in December, compared with economists’ expectations of a 0.1% rise.

The data follows Thursday’s hotter-than-expected consumer inflation print which showed prices rose more than expected in December. Following the latest data, traders’ expectations for a 25-basis-point rate cut in March rose to nearly 71% from 66.3%, as per the CME Group’s FedWatch Tool, Reuters reported.

The rand started the year on the back foot after ending last year on firmer ground, Nedbank said in a note. The local unit shed 1.8% in the first 11 days of 2024 after closing at R18.28/$ in 2023, down by 8.7% for the year.

During this week, dollar strength has hit emerging market currencies across the board, Nedbank said.

At 5.20pm the local unit had firmed 0.3% to R18.5807/$, 0.41% to R20.4125/€ and 0.1% to R23.7483/£.

At 5.25pm the Dow Jones industrial average was down 0.41%, while the broader $&P 500 was flat. In Europe, London’s FTSE 100 was up 0.79%, France’s CAC 40 added 0.95% and Germany’s DAX collected 0.94%.