Global bourses bullish, rand weaker

The Star Early Edition - - PRICES - Dr Chris Harmse Chief econ­o­mist Re­bal­ance Fund Man­agers

BOURSES around the globe re­mained bullish last week as the global eco­nomic up­turn and bet­ter than ex­pected earn­ings for listed com­pa­nies pushed share prices higher.

The Dow Jones in­dus­trial in­dex broke through the 22 000 points level on Thurs­day and at the close of the JSE on Fri­day it traded on 22 065. This was 11 per­cent higher than the be­gin­ning of the year and 20 per­cent bet­ter than a year ago.

The Dow traded nine days in a row higher and on the back of strong em­ploy­ment data for July, in­vestors re­main pos­i­tive to­wards strong eco­nomic growth and high earn­ings growth for listed com­pa­nies.

The US econ­omy added 209 000 new jobs in July and the av­er­age hourly earn­ings also were up 0.3 per­cent. This in­di­cates a strong in­crease in con­sumer spend­ing.

The EU also re­ported last week that the Euro­pean econ­omy grew by 2.2 per­cent dur­ing the sec­ond quar­ter, as a strong re­cov­ery in this re­gion is also ex­pected.

A high pos­si­bil­ity for an in­crease in the bank rate by the US Fed­eral Re­serve, how­ever, had a neg­a­tive bear­ing on the rand.

The strong move­ment in US shares, to­gether with in­creases in Euro­pean and UK shares also boosted de­mand for emerg­ing econ­omy as­sets. This, to­gether with the much weaker rand, pushed shares on the JSE to new record lev­els.

The all share in­dex gained 1 061 points (1.9 per­cent) last week to close Fri­day on 55 944.83 points. The in­dex is 8.4 per­cent up since the be­gin­ning of July, and 10.4 per­cent higher since the be­gin­ning of the year (year-to-date).

Over the week, the in­dus­trial in­dex in­creased 1.4 per­cent and is now 15 per­cent higher for the year to date. Fi­nan­cials, de­spite the weaker rand, also ended higher for the week by 2.1 per­cent.

Re­sources con­tin­ued their ex­cep­tional run and traded 3 per­cent up for the week and more than 15 per­cent higher since the be­gin­ning of July.

The listed prop­erty in­dex also re­cov­ered most of its pre­vi­ous losses and ended the week 1.7 per­cent higher.

The rand stayed un­der pres­sure and had one of its worst weeks this year.

On Fri­day at the close of the JSE, the rand traded at R13.47 to the dol­lar. This was 46 cents, or 3.5 per­cent weaker than the pre­vi­ous Fri­day close of R13.01.

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