Broad-based gains lift JSE after dovish US Fed signals

The JSE climbed in broad-based gains on Thursday morning, with gold miners faring best, as global risk assets cheered a dovish stance from the US Federal Reserve.

Expectations are now running high that global central banks will turn on the taps to reignite slowing economic growth, something that bodes well for riskier assets, including the rand and equities.

“The case for somewhat more accommodative policy has strengthened,” Fed chair Jerome Powell said on Wednesday, adding to expectations for a rate cut in July and more cuts later in 2019.

Markets have now priced in a 100% chance of a 25 basis-point cut at the Fed’s next meeting in July. The price of gold, which is a hedge against loose monetary policy and inflation, has risen to a five-year high.

At 9.55am the all share was up 0.64% to 58,940.5 points and the top 40 0.65%. Gold miners gained 4.99%, banks 1.53% and general retailers 1.42%.

Gold was up 1.71% to $1,383.39/oz and platinum 0.69% to $817.79. Brent crude was up 1.57% to $63.22 a barrel.

Gold had jumped amid reports that Iran had shot down a US drone in international airspace over the Persian Gulf.

The rand was 0.48% firmer at R14.2566/$.

The rand is at a one-month high against the dollar, although volatility could be on the cards as President Cyril Ramaphosa gets set to present his state of the nation address (Sona) on Thursday evening.

The speech — Ramaphosa’s third such address in 18 months — will be closely watched for plans to fix power utility Eskom as well as for issues of expropriation of land without compensation.

The market could be getting a little ahead of itself in terms of what it is hoping for from the speech, and there is a risk of disappointment, Anchor Capital’s Nolan Wapenaar said.

“The rand is still too weak against our models, although we do think that it might remain so for quite a while,” he said.

KAP Industrial slipped 8.78% to R5.92. It said shortly before markets closed on Wednesday that it expected headline earnings per share to fall by at least 20% in the year to end-June.

Anglogold Ashanti jumped 6.41% to R239.60.

FirstRand was up 1.79% to R70.94.

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