Cape Town – South Africa’s stock market recorded its strongest rally in almost seven months on Thursday, with the Johannesburg Stock Exchange (JSE) surging as investors responded to political developments in the United States and South Africa.
According to Daily Investor, citing Bloomberg, the FTSE/JSE All Share Index climbed as much as 5.2% during Thursday’s trading session, marking its biggest intraday gain since April 8.
The rally was largely driven by gains in precious metals companies following a surge in gold prices, as global markets reacted to the Democratic Party’s sweeping victory in the US midterm elections.
The Johannesburg Stock Exchange had been closed on Wednesday for South Africa’s local government elections, leaving it to catch up with international market movements when trading resumed.
Business Day reported that the All Share Index eventually closed 3.67% higher, after reaching an intraday gain of 5%, while the Top 40 index advanced 3.99%.
Biggest beneficiaries
Precious metals and mining shares were among the biggest beneficiaries, with the precious metals miners index gaining 8.8%, according to Daily Investor. AngloGold Ashanti and Gold Fields led the advance.
Gold prices climbed as much as 2.1% on Thursday to approximately $4,128 an ounce, supported by a weaker US dollar and declining Treasury yields.
The US election outcome, which saw Democrats take control of both the House of Representatives and the Senate, raised expectations that President Donald Trump’s administration could face greater political constraints over its tax and spending policies.
Rowan Williams, chief investment officer at Nitrogen Fund Managers, told Bloomberg that precious metals had become increasingly influenced by movements in US interest rates and the dollar.
The rally was also supported by a sharp decline in international oil prices. Brent crude fell from approximately $118 a barrel the previous week to around $96.71 on Thursday, improving the outlook for mining companies by potentially reducing their operating costs.
Technology investor Naspers was another major contributor to the market’s performance, gaining 13% – its biggest single-day increase since December 2023 – amid improving sentiment towards Chinese stocks.
Political developments
Meanwhile, South Africa’s political developments also provided some support to financial markets.
Reuters reported that the rand strengthened on Thursday as early municipal election results suggested a strong performance by the Democratic Alliance (DA), raising expectations of more investor-friendly coalitions in major economic centres.
With 19% of the votes counted at the time, the African National Congress (ANC) had secured approximately 31.4%, compared with 30.5% for the DA.
The rand traded at R16.34 against the US dollar, gaining approximately 0.5% from its previous close.
The market reaction comes amid growing investor interest in the implications of South Africa’s changing political landscape, particularly the potential impact of coalition arrangements on governance, economic reforms and investment.
In its Number of the Day feature, eNCA also highlighted the JSE’s approximately 5% intraday surge, explaining how political developments in the United States can influence South African markets through currencies, commodity prices and investor sentiment.
South Africa’s stock market was up 6.7% for the week, according to Daily Investor, significantly outperforming emerging-market peers.
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Compiled by Betha Madhomu
