The prospect of looser global monetary policy helped buoy both the JSE and global markets on Friday, with local banks and gold miners faring particularly well.
The market’s pricing in of a 50-basis-point (bps) interest-rate cut by the US Federal Reserve later in July shot up overnight to 45%. This after New York Fed president John Williams said on Thursday that it would be better for the Fed to take “preventative measures than to wait for disaster to unfold”. The Fed itself, however, moved to say that not too much should be read into these comments as they were academic in nature and not a commentary on Fed policy. This caused the likelihood of a 50bps cut to recede to 38.5% by the JSE’s close.
The rand began the day well, but gave up gains as the dollar jumped against the euro after the Fed downplayed Williams’s comments.
Local corporate news was positive, with Pioneer Foods surging 32.09% to R102.50. It said earlier that New York-based food and beverages giant PepsiCo had made an offer to buy it out. PepsiCo said the deal would add meaningfully to the growth of the SA economy. The offer amounts to $1.7bn (about R24bn).
Pioneer shareholder Zeder shot up 23.17% to R4.89 on the news.
Naspers added 0.78% to R3,460.01. It said earlier that it plans to list its international internet assets in Amsterdam on September 11, after postage problems forced it to delay the listing by two months.
The all share ended the day 0.65% higher at 58,248.7 points and the top 40 added 0.72%. The property index fell 0.56%, while banks rose 0.56%.
Gold miners added 2.3%, pushing the index’s gains for the week to 6.75%. These gains came as the price of the precious metal gained 2.5% in the week.
Gold is in the early stages of a significant bull run, and a recent price climb by silver is reinforcing this view, said London-based Sharps Pixley CEO Ross Norman.
Gold Fields added 2.97% to R78.10 and Sibanye-Stillwater 3.31% to R18.09.
Earlier, Asian markets were higher while their European counterparts were mixed. Shortly after the JSE closed, gold had taken a little breather from the day’s high, to $1,426.23/oz, while platinum was flat at $848.57. Brent crude was 0.56% lower at $62.18 a barrel.
The Dow was unchanged at 27,222.97 points, while in Europe, the FTSE 100 was up 0.21% and DAX 30 0.27%; the CAC 40 was flat.
Murray & Roberts slumped 14.55% to R11.80, after the Competition Commission recommended its takeover by German construction firm Aton be blocked.
AB InBev jumped 5.02% to R1,296.56. It said on Friday that it would sell its Australia-based Carlton and United Breweries to Japanese company Asahi Group.
Focus in the week ahead will be on inflation data. On Wednesday, consumer inflation, as measured by the annual change in the consumer price index, is expected to moderate slightly to 4.4% in June from 4.5% previously, according to a Bloomberg consensus.
Farm and factory gate inflation, as measured by the annual change in the producer price index, is expected to moderate to 5.8% from 6.4% previously.