JSE, rand breathe easier after US gets massive stimulus package

THE JSE and the rand yesterday breathed a sigh of relief following a massive stimulus package by the US government to bolster the world’s largest economy in the midst of the coronavirus.

The rand strengthened slightly by 0.24 percent to R17.49 against the dollar at 5pm from a previous close of R17.51.

The FTSE/JSE All Share Index accelerated 5.17 percent to 43 278.25 and the Top 40 Index rose 5.17 percent to 39 493.22 points.

Mining stocks surged 7.49 percent to 34 127.27 points.

Investec’s chief economist Annabel Bishop said the rand took cues from the positive global sentiment.

“The rand has also improved on the patchy, but fractionally better sentiment in global financial markets, as risk aversion has waned slightly,”

Bishop said.

“However, the South African Reserve Bank’s (SARB) additional liquidity measures would also have added to the rand strength today.”

Anglo American Platinum (Amplats) led the rally firming 22.57 percent to R750.18; Impala Platinum (Implats) 17.44 percent to R78.52; AngloGold Ashanti 16.79 percent to R362.10; while Gold Fields increased 16.79 percent to R106.5; and Harmony Gold 13.86 percent to R45.93.

The US Senate yesterday agreed to approve the $2 trillion (R34.8 trillion) stimulus package after days of stalemate.

SARB also eased tensions by saying it would start buying debt in the secondary market to boost liquidity of the struggling financial markets.

Retail stock also advanced 2.26 percent to 3128.71; with Shoprite rising 6.04 percent to R120.09; Pick n Pay 3.52 percent to R64.13; and the Spar Group 3.42 percent to R178.74.

Banking stocks followed suit rising 2.91 percent to 5 074.99 points, with Standard Bank up 4.56 percent at R102.14, Capitec 4.38 percent to R1 000; FirstRand 3.97 percent to R40.10; Nedbank 2.93 percent R81.24.

Only Absa declined, falling 3.8 percent to R76.

The bond yield on South Africa’s R186 reached 10.19 percent from 11.20 percent, and the yield on the R2 030 reached 11.32 percent, from 12.38 percent as a result.

Bishop said bond yields in South

Africa would likely subside further towards pre-crisis levels once SARB begins substantial purchases of government debt across the yield spectrum.

Local businesses have also thrown in their weight behind the lockdown announced by President Cyril Ramaphosa to curb the spread of the Covid19 from midnight tonight.

South African markets surged as most nations entered into lockdown mode to help curb the spread.

ActivTrades’s Ricardo Evangelista said the markets reacted positively to the latest news of a deal being struck between the White House and Congress.

“Risk-related assets recorded gains and the pound joined the bandwagon,” Evangelista said.

“The question now is will this risk rally be sustainable or will it be diluted amid the expected torrent of negative economic performance indicators that investors will soon be presented with?”