Publications
Partners
With the news that the price of Brent crude oil also stabilised above $60 per barrel, almost all major indices on the JSE improved by more than 2%.
Naspers [JSE:NPN] improved by no less than 8.52% to R1 425.43, after a strong run of 5% by Tencent, its Chinese subsidiary on the Hong Kong market. Asian markets also rallied on the Fed's announcement.
READ: Asian markets up after Fed meeting
The disclosure that US interest rates will not go up soon is excellent news for emerging markets like South Africa, as it means investors in developed markets will continue to invest in them because their interest rates are much higher than those in developed countries.
Respite for emerging market currencies
South Africa needs those portfolio investments desperately to finance the shortage on the current account, which could be as big as R200bn this year.
On Wednesday evening, US Fed chair Janet Yellen said she would take a "patient" approach in deciding when to bump borrowing costs higher, allaying market suspicions of a hike before June 2015.
The news from the Fed also offers some respite to emerging market currencies as it put a damper on the rampant dollar. A steadier dollar will also relieve the pressure on commodity prices.
The rand, which was recently as low as R11.81 to the dollar, traded at R11.53 by noon.
READ: Rand rallies after Fed soothes sentiment
At noon the All-share index was also 2.08% higher at 48 267 points and the Top 40 index improved by 2.31% to 42 567 points. Thursday's improvement could also be seen as a correction, as the market has been on the decline for a quite a while now.
The Financial index was only 1.74% higher, but the Industrial index rallied strongly and improved by 2.52% due to the strong performance by Naspers.
Sentiment towards emerging markets also improved with the news that the Russian rouble stabilised after losing almost 90% of its value over the last six months. The rouble's problems made investors nervous about emerging markets in general. John Kilduff, founding partner of hedge fund Again Capital, said traders were relieved that Russia's moves to stabilise its currency appeared to be working.
READ: Rouble rises as Russia acts to halt collapse
Russia said it would sell about $7bn in foreign reserves to prop up the rouble. Other actions are to seek to ease access to foreign currency and protect banks from having to book losses that would weaken their financial strength.
The steadier rouble and reports about lower US crude inventories also gave the oil price a lift.
READ: Brent oil rises above $62
The Resources and Gold indices were both higher, with gold improving by 2.33% and resources by 2.14%. The star performer among resources stocks was Sasol [JSE:SOL], which improved by 6.34% to R419.00. Some analysts think that the share, which sank to a 52-week low recently, now offers good value.
African Rainbow Minerals [JSE:ARI] rallied by 3.02% to R116.41 after its subsidiary Assore [JSE:ASR] gained 3.02% to R152.41.
Assore is still 57.4% down for the year and African Rainbow Minerals 37.8%. BHP Billiton [JSE:BIL] was only 0.74% stronger on R240.73 and Anglo American [JSE:AGL] gained 2.07% to 211.54.
