Hopes for US stimulus package lift shares, rand
‘ Investors counting on relief measures’
THE MARKETS lifted on Friday after US President Donald Trump ended a standoff with the Democrats over a stimulus package, calling for a “skinny” relief bill that would include direct payments and a bailout of the struggling airline sector.
The rand inched up 0.16 percent to R16.42 against the dollar as investors hoped for more certainty about the $ 2.4 trillion stimulus package for the world’s largest economy.
The FTSE/ All Share Index gained 1.15 percent to 55 182 points, and the JSE Top40 Index rose 1.3 percent 50 781 points.
Axitrader analyst Milan Cutkovic said the market faced an intense period in the next three weeks, and Trump’s mood swings would determine the direction of the market.
He said if Trump’s rhetoric increased, the price swings could get bigger.
“Investors seem to be fully counting on further stimulus measures to counter the significant headwinds to the economy, and there is little interest to fight the trend,” Cutkovic said.
Domestically, the market has been battered by weak economic data and indications that growth would likely remain on the backfoot post- Covid- 19.
Attention has shifted to Finance Minister Tito Mboweni’s Medium- Term Budget Policy Statement ( MTBPS) later this month for signs that the government will deliver on promised expenditure cuts.
FXTM market analyst Han Tan said investors remained wary of the risks that lie ahead.
“It’s evident that investors are clinging on to any sliver of hope that the world’s largest economy will see additional fiscal aid,” he said.
Tan said the risk of a protracted wait for the outcome of the US presidential election outcome could not be ruled out entirely. “Such an outcome could leave investors in limbo, which may trigger a bout of risk aversion in the markets.”
Global financial markets were hit by a wave of risk- off sentiment after Trump tested positive for Covid- 19 this month.
But South African stocks rode the wave last week, with resources rising 2.07 percent to 54 392 points, while financials and industrials rose 0.3 percent to 6 704 points. The mining index rose 2.41 percent to 52 135 points, the banks index eased 0.67 percent to 5 388 points, and general retailers fell 0.97 percent to 3 915 points.
Diversified miner Sibanye- Stillwater closed 6.26 percent stronger at R50.10 per share, Impala Platinum rose 4.67 percent to R159.32, and Anglo American ticked up 2.85 percent to R418.14.
Absa eased 0.36 percent to R88.93, Firstrand fell 1.34 percent to R39.15, Standard Bank was 1.84 percent down to R106, and Nedbank lost 0.35 percent to R102.42.
Pick n Pay rose 2.75 percent to R52.40, Shoprite gained 0.34 percent to R138.86, and Woolworths fell 1.41 percent to R36.49.
With the South African Reserve Bank selling a total of R2 billion of its 2025, 2038 and 2046 inflation- linked bonds at its latest auction, yields were mostly higher compared with the previous auctions.
The bond yields showed that investors were still confident in South African assets ahead of the MTBPS later this month despite the weak economy.
FXTM’S Lukman Otunuga said that given the risks related to the economy, the MTBPS will be closely scrutinised by investors and could set the tone for the rest of this year.
“For South Africa, the outlook remains clouded by a selection of negative themes. A fiscal stimulus with a mission of boosting growth and employment may be a more reliable tool,” he said.