JSE gains after a volatile week

The JSE tracked firmer global markets on Friday as inflation fears eased.

The JSE all share joined a global sell-off earlier in the week, having its worst day in more than two months on Thursday after US inflation in April was worse than expected.

Fears that inflation will rise as the global economy recovers from the Covid-19 pandemic have been a theme in the market so far in 2021, but that came sharply into focus after the US inflation report. Investors have been concerned that a large fiscal stimulus, coupled with easy monetary policies, will push prices higher, which will force the US Federal Reserve to raise interest rates sooner.

The local bourse lost 2.79% for the week, dragged lower by weekly losses in the industrial index and miners. The industrial index fell 3.74% for the week, while industrial miners lost 3.24% and precious metals miners were down 2.27%.

“Stocks are ending a volatile week firmer. Despite Friday’s gains, bourses are set for weekly declines after US inflation jitters and falling commodity prices unnerved investors,” Oanda market analyst Sophie Griffiths said.

Global stock markets rebounded on Friday after a number of Fed officials repeated their stance that they viewed inflationary pressures as transitory and would not be reacting to temporary overshoots.

“Concerns over runaway US inflation have been offset by reassuring Fed speakers. The Fed continues to drum home the message that it’s too soon to talk about tightening monetary policy, and the market is listening again,” said Griffiths.

“Fed speakers have been out in droves over the past few days, hoping to get the message across to the market: the Fed is not planning on moving on policy anytime soon,” she said.

On Friday, the all share index gained 0.66% to 66,606.67 points and the top 40 advanced 0.62%. Retailers rose 2.66%, precious metals 1.84%, and listed property 1.41%.

At 5.25pm, the Dow Jones industrial average had gained 0.75% to 34,276.78 points. In Europe, the FTSE 100 had risen 1.1%, France’s CAC 40 1.28% and Germany’s DAX 30 1.12%.

The rand was steady against the dollar on the day, reaching an intraday best of R14.0164/$, according to Infront data. At 5.04pm, it was unchanged at R14.1387/$, while it had weakened 0.62% to R17.1568/€ and 0.43% to R19.9130/£. The euro was 0.46% firmer at $1.2134.

Gold gained 0.61% to $1,837.09/oz and platinum 1.25% to $1,219.57/oz. Brent crude was 1.75% firmer at $68.16 a barrel.