JSE, rand rebound as EU fears abate

03 July 2016 - 02:00 By ANDRIES MAHLANGU

South African markets stacked up well this week as investor concern around the UK vote to leave the EU eased.The hope that central banks would step in to contain the fallout of Brexit stabilised the markets.The JSE shed more than R500-billion in the two days following the referendum, which sent world markets into a tailspin.But sentiment has improved since then, with the All Share index recovering more than half of what it lost in the immediate aftermath of the UK vote results, which came out a week ago.The resources sector outperformed, thanks to a weaker dollar that bolstered commodity prices such as platinum, which rallied past the $1,000/oz mark.The higher platinum price was a boon to platinum stocks, including Lonmin and Impala Platinum, which gained more than 10% each on the JSE.Following in the distance were gold shares, which took their lead from the resilient gold price.Spot gold hovered at 2014 highs at about $1,334.86/oz late on Friday, supported in part by the talk of looser monetary policy by some of the world's major central banks, notably the Bank of England.Governor Mark Carney indicated on Thursday that monetary easing could be on the cards to cushion the effect of Brexit on the UK economy.In addition, markets are betting that the US Federal Reserve will hold off on raising interest rates, which tends to sap demand for gold as an asset class."With fears over the impact of the UK's potential exit from the EU having faded, the focus of commodity markets may soon return to China's economy and currency," Capital Economics' head of commodities research Julian Jessop said in a note.The rand and local bonds benefited from improving global sentiment, with the currency firming to highs of R14.50/$ to the dollar on Friday, from lows of R15.56/$ on Monday.The yield on the benchmark R186 government bond also dipped below 9%...

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