The JSE shot up to a best percentage gain for the year on Thursday, while the rand firmed to a 16-month best against the dollar after the US Federal Reserve issued a less-than-hawkish outlook for the year.

The Fed raised interest rates for only the third time since December 2015.

Trading on the JSE was characterised by high volumes of about R38bn as a result of the March quarter futures close-out. Last week, volumes rarely topped a daily R15bn.

The weaker dollar was a boon for commodities, with spot platinum jumping 0.57% to $958.19/oz. Gold was up 0.72% to $1,227.91/oz after gaining $25 in overnight trade on Thursday.

The rand broke through the R13/$ level in overnight trade on Thursday to R12.76 and recorded further gains to R12.6814, the best level since August 2015.

The JSE closed 2.03% higher at 52,749, the best percentage gain so far this year. The highest level for 2017 was on January 26 at 53,405.70.

Analysts said the 25-basis-point increase by the Fed was as expected, but that the market had hoped for a firmer outlook in light of rising US inflation.

"Instead, Fed chairwoman Janet Yellen reassured markets that the central bank hadn’t turned trigger happy as inflation accelerated," said TreasuryOne trader Phillip Pearce.

This was a clear indication the federal open market committee was trying to stay on par with economic conditions and did not want to get ahead of events yet, Pearce said.

The US’s inflation rate jumped to 2.7% in February, from 2.5% in January 2017 and 2.1% in December 2016. The Fed has an informal target of 2%.

The risk appetite for emerging markets has grown, which is good for the JSE and the rand.

"With only two more hikes signalled for the remainder of the year, it was likely that the market perceived the Fed’s hike as dovish," said MMI economist Sanisha Packirisamy.

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