South Africa’s main stock gauge extended gains on Monday, to rise as much as 2.8% to the highest since August 6, after progress in the development of a coronavirus vaccine sparked a rally across financial markets.
“The announcement of a highly effective vaccine removes some of the long-held concerns that the economic disruption caused by the Covid-19 pandemic would persist indefinitely,” says Lester Davids, an investment strategist at Sharenet Securities. “On this basis, we are seeing mass buying across most risk assets, in both developed and emerging markets.”
The gains come as markets cheer the “certainty around the US presidential election” after Joe Biden’s win, Davids says. Some investors speculate that Biden’s victory could deliver a better trade relationship with US-China and another economic stimulus package could be in store.
“To a certain extent it may also be driven by some short covering by market participants who may have anticipated that the outcome of the election would lead to selling pressure,” Davids says.
The dollar weakened as investors dumped haven assets after Pfizer’s announcement, driving the rand up 2.5%.
Highlights from several sectors:
Rand gains lifted the index for bank stocks up 8.9 to a five-month high.
- FirstRand rose 13%, Standard Bank 7.7%, Absa 7.7%, Nedbank 6.1, Investec 10%, and Capitec Bank 5.1%.
Food and drug sellers rose 7.3%, while general retailers were up 3%.
- Shoprite rose 10%, Clicks 5%, Spar 5%, Bid Corp 9%, Pick n Pay4.1%, and Dis-Chem 3.1%.
- Mr Price rose 3.9%, Woolworths 3.6%, Foschini Group 2%, Truworths International 5%, Massmart 6.5%, Motus 3.4%, and Pepkor 1.8%.
Gold stocks dragged the index for mining stocks down 0.2%, as Pfizer’s announcement saw investors piling into risk assets and dumping havens.
The sub-index for gold stocks was down 9.5%, as bullion fell 2.4%.
- Gold Fields fell 12%, AngloGold Ashanti -7.2%, and Harmony Gold -11% after the company published production data for the three months to September.
Platinum companies fell 3.8%.
- Sibanye fell 7.4%, Impala -2.5%, Northam -3.5%, and Royal Bafokeng -1.8%.