Bruised global stocks on mend

SOUTH African markets staged a stunning recovery this week to close out what has been an eventful month for global markets. The JSE All Share index regained 3% on the week, which also witnessed some respite for the beleaguered rand.

The local currency rallied to its best level to the dollar in about three weeks, partially boosted by the Reserve Bank’s decision to raise interest rates by 50 basis points.

There were other factors that worked in favour of global markets. Chief among these was the rally in oil prices amid speculation that the Organisation of Petroleum Export- ing Countries might convene an extraordinary meeting aimed at cutting production.

Brent crude slid as low as $26 a barrel this month before bouncing back to $34 this week. The drop in the price of oil earlier this month wobbled world equities, although some analysts have countered that lower oil prices carry more benefits for the world economy.

Despite strong gains this week, world markets have ended January with sizable losses. China’s Shanghai Composite index led the pack among the major indices with a 22% drop in dollar terms. The JSE All Share is down 3% on the month.

Gryphon Asset Management portfolio manager Casparus Treurnicht said global stock markets were still expensive given weak global growth.

The economic slowdown in China and emerging markets in general remain a concern for markets.