Banks help lift JSE to November highs

THE JSE broke out of its narrow trading pattern this week after a solid performance from its main constituent indices.

The All Share index bagged a hefty 2.79% on the week to 54 105.40 points, its best closing level since November 4.

Financial stocks led the charge, holding on to gains despite Moody’s changing its outlook for the local banking system to negative from stable on Friday.

The ratings agency cited deteriorating operating conditions, which would challenge banks’ asset quality and profitability, among other factors.

Elsewhere on the JSE, investors continued to nibble away at industrial stocks, leaving the Industrial 25 index at its highest level since November last year. Naspers and Bidvest topped the gainers’ list.

The picture was mixed in the resources sector, with diversified miners picking up some gains but gold miners sliding for the third consecutive week amid a weaker gold price.

The prospect of higher interest rates in the US has raised demand for the dollar, which has an inverse relationship with gold and other metals.

Brent crude briefly rallied past $50 a barrel for the first time since October last year, lifting sentiment on global markets.

IG South Africa’s premium clients manager, Leigh Riley, said the rally in oil prices was particularly positive for emerging-market economies.

The new week looks set to be as eventful, with S&P Global Ratings scheduled to announce the outcome of its credit rating review for South Africa on Friday.

S&P has the country’s rating just one notch above sub-investment grade — junk status — and on negative outlook. Fitch Ratings is also expected to deliver its verdict on the country’s credit rating this week.

FNB analysts expect both agencies to “hold off on an outright downgrade, but reaffirm their negative outlook”.

Also this week, the US will release its closely watched nonfarm payrolls report for May.