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JSE at record high, Fed holds steady

Lindiwe Tsobo

The JSE closed at its highest level yet as investors cheered the US Federal Reserve’s latest comments on monetary policy.

The all share reached an intraday high of 69,761 points on Thursday, before settling at 69,565 points, up 1.52% on the day.

After taking enormous hits on Monday and Tuesday in the wake of China’s crackdown on its technology sector, Naspers and Prosus gained for a second consecutive day on Thursday. Naspers, which owns about 29% of Chinese internet giant Tencent via its global investment vehicle Prosus, saw its share plunge more than 7% on both Monday and Tuesday, after competition authorities ordered Tencent to stop exclusive music licensing deals.

It has, however, recovered somewhat since but at Thursday’s close its market capitalisation was still down R44bn for the week. Naspers jumped 4.08% to R2,859.53 and Prosus surged 3.93% to R1,317.50.

The Fed kept interest rates on hold on Wednesday, and said it would maintain asset purchases at $120bn a month until “substantial further progress” is made on employment and inflation. It repeated its position that rising inflation reflected “transitory factors”. Fed chair Jerome Powell said both the economy and the labour market still had some way to go, and that the pace of the economic recovery would largely depend on the course of the Covid-19 pandemic.

“A decent day in the markets after the Fed avoided a taper tantrum following its policy meeting. It was a very balanced performance from Powell, a reflection of the wide range of views that clearly exist at the central bank,” said Oanda senior market analyst Craig Erlam. “That will be tough to navigate over the coming months but the outcome should be favourable for investors. Tapering is coming but it won’t be rushed, a balance that suits the markets,” he said.

“The committee now has time to better understand the impact that the current wave of infections will have, see how the inflation picture evolves and gather more data on the economic recovery that has shown such promising signs,” Erlam said.

The top 40 gained 1.65%, precious metals added 2.86%, resources 2.61%, industrial metals 2.6% and industrials 1.22%.

The rand also firmed on the Fed’s stance and at 6.15pm it had strengthened 1.3% to R14.5568/$, 1.04% to R17.2937/€ and 0.79% to R20.3205/£. The euro was 0.34% firmer at $1.1882.

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2021-07-30T07:00:00.0000000Z

2021-07-30T07:00:00.0000000Z

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