New record high for JSE after interest rate cut
THE Johannesburg Stock Exchange romped to a new record close on Friday, spurred by a welcome domestic interest rate cut and strong international stock markets.
The all-share index added 82.1 points or 0.92% to 9 035.2, breaking through its previous closing high of 9 003.0 set on Tuesday and signalling that the new year bull run remains convincingly intact.
"The bottom line is the market feels there is still some upside. As soon as it comes off, there is buying at the lower levels," said an equities dealer.
Advancing stocks outshone decliners by 299 to 167 in healthy market turnover of R2.9-billion.
The bourse said in a statement it had recorded the highest number of trades in a week - 128 843 compared with its previous record of 98 275.
The industrial index was up 1.48% or 144.2 points to 9 886.9 in a late spurt, tracking a rise in global bourses on the back of lower-than-expected US consumer price inflation.
December CPI in the US rose 0.2% overall, below the consensus figure from a Reuters poll of analysts of 0.3%. Core inflation at 0.1% was also below consensus of 0.2%. The lower-than-expected figures raised investor hopes that the US Federal Reserve Bank was unlikely to raise interest rates substantially.
JSE banking stocks took heart from commercial banks' one percentage point cut in SA prime lending rates to 14.5%, a welcome although not unexpected move after the central bank on Thursday signalled an easing in interest rates was needed to foster growth.
Lender Nedcor rose 580c to R153.80. Investec collected 500c to R290. Banks and financial services shares are generally the quickest to react to rate changes, as investors begin to discount the benefits of lower bad debts and a bigger loan book flowing from a cut in lending rates.
Elsewhere on the bourse, Tiger Wheels slumped after the auto-parts seller warned it expected to fall short of its profit targets as production levels at its new manufacturing plant were behind schedule.
TiWheel finished 14.44% , or 390c, weaker at R23.10.
Old Mutual rose 15c to R16.70. The life and financial services company announced it had begun talks with Britain's Gerrard Group plc, which it said could lead to it making a bid for the British fund manager and broker.