JSE set for positive session as dovish Fed keeps monetary policy loose

The JSE could be in for another positive session on Thursday, after the US Federal Reserve reaffirmed its previous stance of keeping monetary policy loose to help the world’s largest economy recovery from the Covid-19-induced setback.

The dovish Fed’s stance boosted risk assets, with Hong Kong’s Hang Seng gaining 0.60%, setting the scene for a possible positive session on the JSE.

The JSE all share has barely been moving in recent weeks, but the so-called SA Inc stocks — those that derive most of their income in SA — have made a strong recovery.

Capitec Bank is trading at record highs, which makes it the third largest bank by market value in SA behind FirstRand and Standard Bank Group. Capitec settled at R1,490.31, which gave it market value of R172.3bn, which by far surpasses that of Nedbank and Absa, which have market value of R75bn and R106.6bn, respectively. 

Other stocks are also making waves, with diversified industrial group Barloworld reaching pre-Covid levels at nearly R100. ArcelorMittal SA, the country’s largest steel producer, is now trading at R4.14, up a whopping 314% so far in 2021, though off a low base of R30 touched a few years back.

A Bank of America survey showed on Wednesday that a near-record 71% of SA fund managers expect the local stock market to trade at higher levels six months from now, while 57% have overweight equity positions, the highest percentage since 2011.

The rand, which is highly sensitive to changes in global sentiment, recovered to intraday highs of R14.20/$, from intraday lows of R14.43, which was its lowest level since mid-April following the dovish Fed stance.