MARKET WRAP: JSE kicks off December on a positive note
The all-share index continued the momentum that saw it gain more than 8% in November
The JSE ended marginally higher on Friday, continuing the momentum that saw the all-share index gain 8.4% in November, though the performance came off a low base.
The all-share index closed 0.23% higher at 75,705.85 points, boosted in part by diversified miners.
Anglo American rose nearly 5.7% to R540.76 after it was upgraded to buy by UBS. Kumba Iron Ore gained 3% to R610.38, extending its gains to about 24% over the past month.
The listed property sector held up reasonably well on the day, albeit also off a very low base.
“Considering the strong move, I would naturally expect some sort of pause/consolidation or even a minor pullback before a potential resumption of the upward momentum,” said Lester Davids, analyst at Unum Capital.
“Historically, November is a strong month while December is less certain. The average gain for the fourth quarter, using a 20-year data, is 5.73% while the median gain is 6.89%.”
The spectacular gains in November were in line with global equities, including the S&P 500 that notched up 9%.
Investors are increasingly convinced that the US Federal Reserve is done with its rate-hiking cycle and may begin cutting interest rates from 2024 given the apparent signs of slowing economy.
The expected US policy pivot has undermined the dollar to the benefit of commodity prices, which have boosted commodity shares.
Investec chief economist Annabel Bishop said in a note that the markets were pricing in a cumulative 100 basis points worth of interest rates cuts in the US in 2024.
“The quickening in US rate cut expectations has fostered risk taking in global financial markets. As US rate cuts occur, returns are expected to fall on these interest rate assets, boosting attraction for higher yielding (risk) assets such as emerging markets bonds,” Bishop said.
“In addition, global financial markets tend to see more risk taking over the October to April period, followed by a ‘sell-in May-and-go-away’ run before the northern hemisphere summer vacations.”
However, the rand has hardly benefited from the global risk-on environment over the past month, suggesting that SA’s long-standing challenges, including electricity, rail and port inefficiencies, held the currency hostage.
The rand was 1% stronger at R18.67/$ in late trade on Friday, but was flat over the past month despite a weaker dollar.
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