Market shrugs off Eskom loadshedding

Rallies to an all-time high as the JSE All Share Index rises more than 1.3% to breach the 66 000 points mark

THE MARKET rallied to an all-time high yesterday as the JSE All Share Index rose more than 1.3 percent to breach the 66 000 points mark and the rand hit a five-week high following optimism over the $1.9 trillion (about R28trln) US fiscal stimulus that fuelled risk-on sentiment and the resumption of the country's vaccination programme.

The benchmark inched up 1.5 percent to 60 561.38 points at the close of trade, with risk-on sentiment boosted by mining and banking stocks.

The mining index shot up more than 3 percent while banking stocks rallied 1 percent.

Yesterday, Health Minister Dr Zweli Mkhize allayed fears over South Africa's vaccination programme, saying the campaign for healthcare workers will move ahead with Johnson & Johnson's Covid-19 vaccine to arrive next week.

Data has shown that the AstraZeneca vaccine, which arrived in South Africa on February 1, offered minimal protection against mild to moderate illness from the dominant local virus variant. The government said it would also open land borders with neighbouring countries next week.

The market shrugged off Eskom's decision to reimplement rolling blackouts, rising loadshedding to level 3 for the first time this year.

The JSE's largest offshore exposure has seen the benchmark index rising to unprecedented levels since the beginning of 2021 as it benefitted from market developments in China and the US.

FXTM's market analyst Han Tan said the markets appeared more concerned about the timing of the US stimulus rollout rather than the headline figure, hoping it will arrive sooner rather than later.

“Global investors are likely to ignore any political drama emanating from the Senate during this trial unless it has repercussions on the progress of the next round of US fiscal stimulus,” Tan said.

“Should this show of partisanship in the Senate amid the impeachment trial bleed over into fiscal stimulus talks and delay its rollout, that could trip up risk-taking activities in the markets.”

The rand appreciated 1.26 percent to exchange hands at R14.68 against the greenback at 5pm, easing slightly from its R14.60 in earlier trade.

The currency traded below the R15/$ mark in February last year, but quickly stepped off the cliff, weakening rapidly to bottom out at above the R19/$ mark in April as Covid-19 panic stunned the markets.

The rand then spent the next 10 months clawing its way back to its starting position below R15/$, coming full circle as global sentiment worked in the rand's favour.

“With such dramatic movements, it is little wonder that traders have nicknamed the USD/ZAR pairing ‘the rattler',” said Bianca Botes, the director of treasury management company Peregrine Treasury Solutions.

She added that the lockdown restrictions appeared visually to have influenced the rand's movements but in reality, global factors such as stimulus, liquidity, risk-on sentiment and the hunt for yield have played a much larger role in the rand's strengthening over the past few months.

“As local focus shifts to President Ramaphosa's speech, we will be watching carefully for any insights into government's economic policies, as well as how the government intends to address the glaring issues at stateowned enterprises such as Eskom and SAA, which continue to weigh heavily on the country's already over-burdened balance sheet.”