JSE higher as markets rally on expected Trump growth policies

THE JSE closed firmer yesterday as resources and retailers buoyed the market amid positive global markets.

Banks and financial shares also gained on a stronger rand‚ but gold stocks retreated sharply as the dollar firmed marginally to the euro.

A record close on the Dow on Monday acted as catalyst for global markets to rise on a view that economic policies under a Donald Trump administration would boost US gross domestic product (GDP) growth.

The shift into value stocks from low volatility and momentum shares had quickened amid rising yields‚ giant asset manager Blackrock said.

“The dollar index has hit a 14-year high‚ hurting emerging-market currencies and bonds already suffering from Trump policy uncertainty‚” it said.

A shift to US fiscal policy should support economic expansion‚ but Blackrock warned a lack of detail on incoming US administration policies might damp capital expenditure.

Higher oil prices supported sentiment. Commodity prices were softer.

The JSE all-share index closed 1.03% firmer at 51 117.7 points and the bluechip Top 40 added 0.92%.

General retailers rose 3.09%‚ banks 2.88%‚ food and drug retailers 2.51%‚ resources 1.66% and financial stocks 1.62%. The gold index retreated 4.53%.

South African investors are in a dilemma‚ analysts say. On the one hand‚ high political risk was prompting them to seek diversification.

“On the other hand‚ they are reluctant to invest with a relatively weak currency such as the rand‚” DeVere group analyst Gavin Smith said.

“Investing 55% in global developed market equity funds will be the preferred asset mix‚” he said. – BDlive