Stocks at the JSE surged to a fresh all-time high yesterday as market sentiment improved further across global markets after dovish US Federal Reserve (Fed) minutes reinforced bets policymakers will cut interest rates in September.
The JSE all share index rose 0.9% to touch 84 800 index points for the first time in history, extending gains for the second day and reaching fresh record highs, buoyed by resources, financials and telecoms stocks.
Sasol surged by 6.7% to R145.00 per share, followed by Karooooo, which rose 5.5% to R675.00 per share, while Shaftesbury Capital went up by 4.5% to R34.51, and Telkom and Richemont were 2.7% and 2.6% higher to R26.71 and R2 914 per share, respectively.
Mining and banking stocks, however, were among those which fell the most yesterday.
Sibanye-Stillwater’s stocks were 1.3% down to R19.48 per share even after the company announced that it had secured an additional €500 million debt financing to complete a new lithium mine in Finland.
Over the past four weeks, the South Africa stock market composite index has gained 4.55%, and in the last 12 months, it increased 14.84%.
The momentum in the JSE in August has been driven by sustained optimism over potential rate cuts in the US, and all eyes have turned to the start of the Jackson Hole Economic Symposium that gathers global central bankers, with Fed chairperson Jerome Powell set to speak today.
During the regular press conference, Powell said a September cut could be on the table if inflation moves down in line with expectations and that he could imagine scenarios in which the Fed could cut rates several times this year or not at all.
In South Africa, this momentum has carried on this whole week, much so after the headline inflation rate plunged to a three-year low of 4.6% in July, edging closer to the South African Reserve Bank’s preferred target of 4.5% and strengthening the case for policy easing.
Meanwhile, the rand struggled to recover gains yesterday and weakened by 0.6% to R18.00 against the US dollar as the greenback held its decline in anticipation of Powell’s speech.
However, Investec chief economist Annabel Bishop said the rand was expected to strengthen in the remainder of the year, with the US expected to begin its interest rate cutting cycle next month with a 25 basis points drop.
“An unexpectedly hawkish tone at tomorrow’s speech would negatively impact the financial markets, with the rand already having weakened today, to R17.97/$1 after closing at R17.85/$1 yesterday, and at R17.67/$1 on Monday,” Bishop said.
“South Africa’s FRA (forward rate agreement) curve has factored in another interest rate cut this year, at the November Monetary Policy Committee meeting, and another in the first quarter of 2025, with this more rapid cut trajectory now weakening the rand.
“The South African markets’ expectations for the domestic interest rate cut cycle is not quite as rapid currently as the markets’ expectations for the US, which is preventing worse rand depreciation, but much will depend on future inflation prints.”
BUSINESS REPORT