JSE rides out volatility as rand drops
SOUTH African markets ended an action-packed week with mixed results, with the share market ending decently and the rand extending its losses.
The All Share index finished 2% higher at 52 806.10 points as the weaker rand bolstered the share prices of companies that generate the bulk of their earnings outside South Africa.
Mining stocks led the charge, rebounding from two consecutive weeks of losses, despite renewed interest in the dollar that jolted commodity prices.
Industrial and financial shares also put up a positive performance, with the latter sector ending a three-week losing run.
Greg Davies, equity trader at Cratos Capital, said financial stocks were “oversold in a short term”.
Global markets stumbled earlier in the week upon the release of the US Federal Reserve’s April meeting minutes, which suggested interest rates may rise as early as June.
The prospect caught markets off-guard, sending most stock, commodity and currency markets weaker while the dollar gathered strength.
The weaker rand also commanded much attention this week. The domestic currency nearly touched R16/$ this week before coming back slightly, from R15/$ last week.
The Sunday Times report that Finance Minister Pravin Gordhan was likely to be arrested on charges of espionage triggered weakness in the already vulnerable local currency before the strong dollar worsened the moves.
Consumer inflation figures were bang on expectations, and the Reserve Bank kept rates on hold, as expected.
The consumer price index eased to an annualised 6.2% in April from 6.3% in March.
“The decision not to lift its policy rate was motivated by the poor performance of the economy, and not by the inflation outlook alone, which remains in an upward trajectory,” said Colen Garrow, economist at Lefika Securities.
The rand also dragged the yield on the benchmark R186 to its highest level since January.