JSE off to a flyer as commodity prices rally

The JSE made a promising start to the new year this week, with Anglo American and luxury goods maker Richemont doing the heavy lifting as they rallied 13.64% and 14.69% respectively, adding more than R100-billion to their combined market valuations.

Other diversified miners also stacked up well, as did the broader industrial sector, which includes retailers. These gains helped push the All Share index up 3% to 52,794.80 points, its highest level since September.

"Our market has been well buoyed by the recent commodity [price] rally and, in my opinion, will continue to do so in 2017," said Vasilis Girasis, a trader at BP Bernstein Stockbrokers.

"The All Share looks like it's breaking out from a technical point of view, so that is helping too."

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The local share market lagged its international peers last year, partly due to "black swan" events such as Brexit, which took a heavy toll on some JSE-listed stocks. In addition, the rand fared much better in the past year than initially anticipated, holding back large stocks that generate the bulk of their revenues in foreign currency.

The US stock market, which tends to set the trend for global markets, is battling to maintain the post-election momentum that propelled major equity indices, including the Dow Jones Industrial Average, to record levels.

The dollar stalled after president-elect Donald Trump failed to provide details of his campaign promises of increased fiscal spending and tax cuts that fuelled the rally late last year.

The weaker dollar favoured commodity prices, particularly gold and platinum, which rebounded after a soft patch in December.

"There's been no shortage of catalysts over the past few weeks, with the Federal Reserve and ... Trump keeping things interesting, and now we can add corporate earnings season to the mix as the Dow continues to struggle to break the psychological 20,000 barrier," said Oanda senior market analyst Craig Erlam.

Local retail sales and inflation data take centre stage on Wednesday, with some analysts anticipating consumer price inflation to have quickened to 6.8% in December on an annualised basis from 6.6%. November retail sales are expected to rebound 0.5% on a year-on-year basis after contracting 0.2% in October.