JSE firms as US boosts sentiment

The JSE tracked firmer global markets on Friday as investors cheered strong company earnings in the US while inflation fear begins to show signs of easing.

US producer inflation came in surprisingly low on Thursday, rising 0.5% month on month, its slowest pace so far in 2021, while strong earnings reports from major US banks further boosted sentiment.

“Stocks rallied after a strong round of earnings and a welcome dip in core producer prices,” said Oanda senior market analyst Jeffrey Halley. Investors’remain as today s inflationary committed environment to stocks would probably not trigger a rapid interest-rate hiking schedule from the US Federal Reserve, said Halley.

The JSE all share gained 0.27% to 67,028 points, its highest close in seven weeks. The top 40 added 0.17%. Retailers gained 1.46% and industrials 0.75%. Precious metals lost 0.62%, banks 0.5% and financials 0.24%.

At 6pm, the Dow Jones Industrial Average was 0.86% firmer to 35,212 points. In Europe, the FTSE 100 gained 0.37%, France’s CAC 40 0.63% and Germany’s DAX 30 0.81%.

Earlier, the Shanghai Composite, Hong Kong’s Hang Seng and Japan’s Nikkei all closed higher.

Despite a positive end to the week, global risks such as surging energy prices and supply chain disruptions threatened global sentiment, raising concern that central banks need to accelerate monetary policy tightening.

“The JSE and the rand benefited from global risk-on sentiment, but with a number of challenges continuing to pose a potential threat to the global economic recovery, heightened volatility is likely to remain in the system,” said RMB economist Siobhan Redford. At 6.10pm, the rand had firmed 1.02% at R14.6317/$, 1.01% to R16.9628/€ and 0.23% to R20.1307/£. The euro was little changed at $1.1593.

Mediclinic’s share price rose, leading JSE gains, after the group said all three of its divisions were bringing in more revenue than before Covid-19, with an encouraging recovery in SA nonelective surgery as the third Covid-19 wave fades.

The group, valued at R51.5bn on the JSE, operates in Switzerland, the Middle East and SA. Like other hospital operators, it was hit by the pandemic, which resulted in additional staff and equipment costs, while nonurgent medical procedures were put off. Its share price rose the most since July 2020, up 11.39% to R69.84.

Gold lost 1.63% to $1,767.20/oz and platinum 0.26% to $1,058.50. Brent crude was up 0.75% at $84.82 a barrel.