Strong data from US, China buoy JSE shares
STOCKS on the JSE rose to their highest level in more than a month on Friday, buoyed by precious metals after economic data from China and the US, the world’s two largest economies, indicated a rebound in global growth.
The FTSE/JSE All Share Index (Alsi) traded 1.26 percent higher at 68 687 points, its highest level since March 11, as the risk appetite was supported by the strong economic numbers from the US and China.
The Alsi closed at 67 812.15 points, up 1.1 percent, while the Top40 Index closed at 62 084.39 points, up 1.14 percent.
The precious metals and mining index rose more than 3 percent to 65 411 points, as investors believed that China and the US were showing signs of a quicker-than-expected recovery.
China on Friday posted its highest recorded growth of 18.3 percent in the first quarter, accelerating sharply from 6.5 percent in the fourth quarter.
US retail sales jumped 9.8 percent in March as consumers used their stimulus cheques to spend heavily, and jobless claims dropped last week to a one-year low.
FXTM’s market analyst, Han Tan, said the appetite for risk assets was reliant on the sustained reopening of the global economy.
He said the markets were cheering signs that the US economy was well and truly getting back on its feet.
“China’s stellar economic prints, coupled with better-than-expected data out of the US, show the global economic recovery is indeed gathering momentum, and such prospects appear to justify the bullish prospects for risk assets moving forward,” he said.
The rand was not the best-performing emerging-market currency on Friday as investors continue to monitor company earnings reports and the Covid-19 numbers.
Health Minister Dr Zweli Mkhize has launched the Electronic Vaccination Data System for the second phase of the vaccine roll-out, which is expected to start in May.
The rand dipped to R14.31 against the dollar on Friday, from R14.18 to the greenback on Thursday. By 5pm, the rand was trading at R14.40, up R0.17 from the previous day’s close.
However, analysts saw the current rand strength as surprising on the upside. Anchor Capital’s Nolan Wapenaar said the rand had long been a favourite investment destination for traders who would feel emboldened to increase their exposure to the currencies of countries where interest rates were above zero.
Wapenaar said the consensus view on the reopening of economies was that the commodity rally still had legs, and therefore investments in South Africa would remain attractive.
“Combining these two themes means that the rand will see some offshore support for a while. Our view is also that the short-term momentum which is strengthening the rand is strong, and we believe that it is certainly possible that the local unit will test levels stronger than R14 versus the US dollar.”