US profits lift global sentiment

The JSE edged higher in line with world markets on Wednesday as investors took heart from strong corporate earnings in the US, but the mood remains cautious. The all share index reached its best level in more than a month in intraday trade and ended the day 0.18% higher, boosted by industrials, precious metals and banks. The gains were limited by weaker food producers, listed property stocks, retailers and industrial metals.

The JSE edged higher in line with world markets on Wednesday as investors took heart from strong corporate earnings in the US, but the mood remains cautious as uncertainty about inflation, the global economy and Covid-19 persist.

The all share reached its best level in more than a month in intraday trade and ended the day 0.18% higher at 66,894.79 points, boosted by industrials, precious metals and banks. The gains were limited by weaker food producers, listed property stocks, retailers and industrial metals. The top 40, which comprises the biggest listed companies, including heavyweights Naspers and Prosus, added 0.26%.

A positive risk sentiment pervades markets, pushing equity and commodity prices higher, said TreasuryONE currency strategist Andre Cilliers. Still, the main themes driving markets this year are essentially unchanged — the coronavirus pandemic and its effect on the global economy, inflation that appears to be more persistent than initially forecast and its effect on monetary policy.

“As volatile as markets are, the factors driving that volatility don’t change quite so much; rather it is the uncertainty around these factors that drives market volatility,” said RMB economist Siobhan Redford. “Markets continue to worry about inflation and monetary authorities’ responses, a slowdown in global economic recovery and Covid.”

At 6.21pm, the Dow Jones industrial average was 0.47% firmer at 35,623.03 points, while in Europe, the FTSE 100 and Germany’s DAX closed little changed on the day, France’s CAC 40 ended 0.56% higher.

SA consumer inflation edged up for the second successive month in September, increasing by 5% year on year from 4.9% a month earlier, driven by fuel prices, rents and food prices and in line with market forecasts.

“SA, like the rest of the world, faces further pressure from high oil prices, at least until the end of this year, but this could push through for the entirety of the northern winter,” Redford said.

“What is clear is that policymakers in SA and around the world remain in a ‘data dependent’ state, having to respond to outcomes as forecasts remain more uncertain than usual.”

At 6.09pm, the rand had strengthened 0.65% to R14.4265/$, 0.53% to R16.8005/€ and 0.46% to R19.9355/£.

The euro was 0.11% firmer at $1.1645. Gold gained 0.82% to $1,783.83/oz and platinum 0.86% to $1,052.01. Brent crude was 0.76% weaker at $84.51 a barrel.