Virus vaccine news boosts rand and JSE

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JOHANNESBURG – The JSE firmed yesterday on a potential coronavirus (Covid-19) vaccine, with the rand also strengthening and crude oil making a comeback in anticipation of a surge in demand.

By 5pm, the rand was bid 1.01percent firmer at R18.39 against the dollar, and the market closed in good spirits, with the JSE All Share Index up 3.53percent at 51382points, driven by the energy sector.

Brent crude firmed 7.73percent and touched the $35 (R650) a barrel mark for the first time since March, pointing towards the end of major oversupply after weeks of lockdowns, restricted travel and many people working from home.

The stronger Brent crude oil spread across petrochemical companies with Sasol, which has withstood headwinds his year, rising 10.3percent to close at at R85.37.

Lester Davids, a trading desk analyst at Unum Capital, said the oil price surged due partly on expectations that the lifting of lockdown restrictions would see economic activity slowly returning to normality.

STRONGER Brent crude oil prices were good news for petrochemical companies, including Sasol, whose shares closed 10.3 percent higher at R85.37 a share yesterday. Reuters

“Expectations that supply may be cut by major producers is also boosting the current price,” Davids said. “However, the question remains whether demand is enough to offset the excess global supply, hence it remains to be seen whether the price surge is sustainable.” Davids said that more relevant to yesterday’s advance, global markets had adopted a risk-on tone on the back of expectations that the US Federal Reserve would provide more stimulus to the US in order to aid the economic recovery.

Federal Reserve chairperson Jerome Powell said in an interview on Sunday that the Fed had plenty of stimulative monetary options and was not out of ammunition. “This is fuelling commodity prices and in turn commodity shares,” said Davids, referring to the rally in the prices of gold and platinum.

The gold spot price closed 0.45percent weaker at $1735.24 an ounce on news of a possible vaccine for the pandemic. The JSE gold mining index rose 3.18percent to 5005points at noon before closing 0.17percent at 4816 points, following news of the vaccine.

Earlier yesterday, Carlo Alberto de Casa, the chief analyst at ActivTrades, said that gold was rocketing, with the price climbing to its highest level in seven years. “Dovish comments from the Federal Reserve and concerns about the stock market have lifted bullion. It is clear that investors are continuing to buy bullion as insurance in case there are any further corrections on stocks,” De Casa said.

Gold tailings processor DRDGold earlier yesterday led the rally among gold producers when it jumped by 5.53percent to R19.84 a share before closing 1.12percent lower at R18.59 a share. AngloGold Ashanti, which had risen by 3.7percent to R523.89 a share, closed 0.65percent lower at R501.95 a share.

The platinum price rallied 6.39percent to $873.90 an ounce from Friday’s close of $821.45, helping producers of the precious metal to gain momentum on the JSE. Northam Platinum led the rally, closing 12.06percent higher at R98.50 a share. Anglo American Platinum rose 9.27percent to R1103.50, Sibanye-Stillwater closed 8.81percent up at R38.90 a share, while Impala Platinum was up 9.46percent at R120.70 a share


By Dineo Faku


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