The Star Early Edition

Do­mes­tic share mar­kets hold their own

- Dr Chris Harmse Chief econ­o­mist Re­bal­ance Fund Man­agers

DO­MES­TIC share mar­kets con­tin­ued to per­form sur­pris­ingly well over the last year as well as dur­ing last week.

The all share in­dex on the JSE reached new record highs for four out of the five days last week and closed Fri­day on a new high of 59 638.21 points. This de­spite the news that the coun­try’s un­em­ploy­ment rate re­mained at a high 27.7 per­cent dur­ing the third quar­ter, that the out­look for man­u­fac­tur­ing pro­duc­tion still re­mains neg­a­tive and mar­ket eval­u­a­tions to­wards a fur­ther junk down­grad­ing within the next few weeks re­main emi­nent.

These un­cer­tain geopo­lit­i­cal fac­tors and weak eco­nomic in­di­ca­tors had a neg­a­tive ef­fect on the bond mar­ket. The Gov­ern­ment’s R186 bond in­creased fur­ther to 9.2 per­cent against the 9.13 per­cent the pre­vi­ous Fri­day and 8.8 per­cent the day be­fore the medium term bud­get speech on Oc­to­ber 25.

Com­mod­ity prices re­mains pos­i­tive and the Brent oil price traded above $60 (about R838) a bar­rel.

The rand, af­ter four days of good re­cov­ery, had tum­bled once again on Fri­day to end the week weaker than the pre­vi­ous Fri­day. The lo­cal unit traded last Wednesday and Thurs­day well be­low the R14 to the dol­lar level, but lost 23c on Fri­day alone to R14.22 to the green­back at the close of the JSE on Fri­day. This was 0.6 per­cent weaker than the pre­vi­ous Fri­day.

Against the euro, the rand lost 13c (0.8 per­cent) and had traded Fri­day af­ter­noon on R14.54, and against the pound the cur­rency de­pre­ci­ated by 4c (0.2 per­cent) to R18.59, de­spite the weaker pound af­ter the Bank of England had in­creased in­ter­est rates last Thurs­day.

News that US in­ter­est rates re­mained the same and higher job fig­ures pub­lished on Fri­day boosted global share mar­kets. The US un­em­ploy­ment rate came down to only 4.1 per­cent in Oc­to­ber, while the av­er­age hourly wage stayed the same. This gives a good change that in­ter­est rates in the US will not in­crease soon.

On the JSE, share prices were helped by this news and the weaker rand. The all share in­creased by 1.5 per­cent last week. The in­dex is now al­ready 17.7 per­cent higher than the beginning of the year.

All the other main sub-in­dices also had in­creased, with fi­nan­cials gain­ing 1.8 per­cent, in­dus­tri­als up by 0.8 per­cent and re­sources climb­ing by 3.5 per­cent.

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