Major indices on the JSE reached fresh all-time highs
Major indices on the JSE reached fresh all-time highs.
The JSE closed softer on Friday as it paused from its all-time highs of Tuesday. Major indices on the JSE reached fresh all-time highs, with the all-share index (alsi) reaching a new high of 60 589.77 points. The index closed on 59 776.12 points on Friday.
The index was driven mostly by major rand-hedged stocks as the rand lost some value against the US dollar on the back of dollar strength. The rand lost approximately 2.2% of its value to the strengthening USD, together with other emerging market currencies. Current political fears and the looming downgrades did little to support the rand.
Saudi Arabia’s crackdown on corruption, growing tensions between Iran and Saudi Arabia and the potential for a Venezuelan debt default all contributed to push oil prices higher in the past week. The price of Brent Crude oil was at around $63.50 per barrel, which, in conjunction with the softer rand, could indicate a rise in petrol prices in the coming months.
Global equities reached all-time highs at midweek before backing off slightly ahead of the weekend. US markets would seem a bit expensive, but they are supported by strong earnings, with 90% of the members in the S&P 500 Index having reported for the third quarter. Earnings have grown 6% compared to those of the same quarter a year ago. Although this percentage could have been higher, US insurance companies were negatively impacted by claims concerning the hurricanes that struck earlier this year.
The governor of the People’s Bank of China, Zhou Xiaochuan, cautioned again that his country’s financial system is becoming significantly more vulnerable because of high leverage. “Risks are accumulating that are hidden, complex, sudden, contagious and hazardous,” the central banker bluntly warned. Zhou continued that China should open up markets, relax capital controls and reduce restrictions on non-Chinese financial institutions to counter the rise in leverage.
Next week I will have more on the impact of downgrades.
SECURITAS – Wealth Management
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