MARKET WRAP: JSE in record territory again
Investor appetite returns as early indications point to Omicron variant being less severe than initially feared
The JSE reached a record high on Tuesday tracking the rally in global markets as concerns about the Omicron variant of Covid-19 eased.
The JSE all share gained more than 2% — the most since March — as early indications suggest that the latest strain of the virus isn’t as severe as initially feared. Initial data from SA continues to point to infections of Omicron leading to mild illness, and while cases have surged, patients are requiring less medical intervention.
While the president of pharmaceutical and biotechnology company Moderna has warned of a “real risk” that existing Covid-19 vaccines will be less effective against Omicron, Anthony Fauci, the US’s medical adviser, said its severity may be limited.
On Tuesday, research from GlaxoSmithKline shows its antibody treatment is effective against the new strain. Some governments are, however, continuing to exercise caution, including the imposition of a vaccine mandate on workers in the private sector and tightening up on preventive measures.
“Following on from Monday’s indicative news from SA that the new Covid-19 variant could be milder than previous versions symptom-wise, much the same message was reinforced by Anthony Fauci. That was all markets needed to hear, really, and equity markets piled back in,” said Oanda senior market analyst Jeffrey Halley.
The JSE all share closed 2.71% higher at 72,939.25 points — led by industrial metals (5.65%), resources (4%), and industrials (2.66%) — and the top 40 was up 2.96%.
The rand has edged closer to R16/$ as SA’s GDP print surprised on the downside with the economy contracting by 1.5%. Business Day TV unpacked the moves playing out in the currency scene with RMB's John Cairns.
“The JSE ... is benefiting from risk-on sentiment as fears surrounding the potential of the Omicron variant’s disruption to a global economic recovery wane,” said IG senior market Shaun Murison. “Emerging markets ... have been underperforming developed markets for quite some time and are finding some impetus to exaggerate gains and outperform over the near term.”
Murison noted that resources were a primary driver of the JSE on Tuesday. “A positive global economic recovery suggests increased appetite for these commodities,” he added.
At 6.43pm, the Dow Jones industrial average was 1.55% firmer at 35,773.38 points. In Europe, London’s FTSE 100 closed 1.49% higher, Germany’s DAX added 2.82% and France’s CAC 40 was up 2.91%.
Earlier in Asia, Japan’s Nikkei ended the day 1.89% firmer, Hong Kong’s Hang Seng was 2.71% higher and the Shanghai Composite added 0.16%.
At 6.09pm, the rand had strengthened 0.16% to R15.8619/$, 0.54% to R17.8206/€ and 0.42% to 20.9857/£. The euro was 0.43% at $1.1236.
Gold gained 0.2% to $1,782.19/oz, while platinum rose 2.02% to $961/oz. Brent crude was 3.01% firmer at $75.94 a barrel.
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