Sharply higher close as JSE focuses on extended ECB stimulus programme

THE JSE closed sharply higher yesterday as the market looked past disappointing mining and manufacturing data and instead followed surging global markets after the European Central Bank (ECB) extended its stimulus programme.

Retailers and banks were firm favourites, in risk-on trade, as resources also rose on the weaker rand, and despite softer metal prices.

Mining output dropped by an annual 2.9% in October, much worse than the expected growth of 2.7%.

Output in the manufacturing sector also performed poorly, falling by an annual 2.7% from expected growth of 0.7%.

Capital Economics economist John Ashbourne said the data suggested that the economy might have performed even worse in the fourth quarter than in the third, when growth was a tepid 0.2%.

The bad news did not affect the JSE, however, with miners and industrials getting a boon from the ECB decision to extend its asset purchasing programme to December next year from the end of March, but to reduce it to a monthly ß60-billion from ß80-billion.

Barclays Research analysts described the ECB step as “a cautious reduction of quantitative easing”.

The JSE all share closed 2.16% higher at 50 543.40 points and the blue-chip Top 40 added 2.25%. General retailers jumped 4.1%, with food and drug retailers up 1.7%.

Banks rose 3.03% and financials 1.68%. Resources climbed 2.7%, industrials 2.13%, and food and drug retailers 1.7%.

The gold and platinum indices gained as the metal prices dropped.