Stocks on the JSE ended the week on Friday marginally higher, with the All Share Index just 0.1% higher to 85 608 index points after a choppy session, achieving its seventh consecutive day of gains and a weekly rise of 2.1%.
Gains on Friday were driven by the resource-linked sector, boosted by rising gold prices, which helped offset weakness in financials, industrials, technology, and retail stocks.
The JSE’s advance had been supported by strong performance in the retail and financial sector just a day before, with Mr Price posting a 9% surge following robust earnings.
Montauk Renewables led the rally on the JSE on Friday, rising 8.0% to R79.00 per share followed by Anglo American at 5.5% to R470.02 per share, and PowerFleet, which rose 4.9% to R123.00 per share.
Gold climbed $2 680 (R48 657) per ounce on Friday, rising for the fifth straight run, and on track to gain nearly 5% this week, as investors turned to safe-haven assets amid increasing geopolitical risks.
Earlier this week, Ukraine launched its second Western-supplied missile into Russia, while Kyiv’s air force reported that Russia fired its first intercontinental ballistic missile at Ukraine on Thursday in retaliation.
Markets continued to assess the Federal Reserve’s (Fed) monetary policy outlook after US jobless claims unexpectedly fell, adding to speculation about a slower pace of Fed rate cuts.
Domestic investors continued to digest the South African Reserve Bank’s (SARB) recent decision to implement a cautious 25 basis points rate cut, taking the repo rate to 7.75% and the prime rate to 11.25%.
The SARB’s tone was cautious, reflecting its concern about the uncertain and changing global environment but views the risks to the inflation and growth outlook as balanced. The SARB expects inflation to trend around the midpoint of the target range throughout 2024 to 2027.
Headline inflation now averages 4.5% in 2024 from 4.6% previously. The inflation forecast was left at 4% for 2025 but raised 4.6% from 4.4% for 2026. The upward revision for 2026 mainly reflected more aggressive electricity price increases.
“The SARB’s decision comes as no surprise, given the ongoing moderation in inflation. Despite the current favourable trend in domestic inflation, the risks to the outlook have increased slightly since the September meeting,” said Nedbank economist Isaac Matshego.
“The rand will likely face bouts of pressure amid the anticipated changes in US economic policies. In addition, the ongoing geopolitical conflicts still pose upside risks to oil prices, but these will likely be countered by muted global demand.”
Meanwhile, traders also assessed stronger-than-expected Purchasing Managers’ Index data from the US, which raised expectations that the Fed would need to slow the pace of easing.
Economists foresee President-elect Donald Trump’s economic policies having an inflationary and opposite-to-intended effect on the US economy.
“Out of the three major policies that Trump wants to implement, namely trade protectionism, immigration crackdowns and fiscal reform, two of the three - trade tariffs and immigration – will create headwinds for free trade and an affordable domestic labour market,” said Citadel chief economist Maarten Ackerman.
“In short, both of these moves are inflationary in nature and negative for economic growth, which implies that interest rates in the US might not decline as quickly as had been hoped.”
BUSINESS REPORT