DAVID LE PAGE, Johannesburg | Friday 6.00pm.
THE Johannesburg Stock Exchange soared on Friday following Thursday’s surprise 0,25% interest rate cut from the United States Federal Reserve Bank.
Its overall 5% increase was led by the financial index which rose 7,92%. Adding to the glow brought by the rate cut was positive international response to the news from Anglo American Corporation of its intention to merge with international resources company Minorco and list on the London Stock Exchange.
At the midday tender, the Reserve Bank’s repo rate fell 26 basis points to 21,343%, which had pundits guessing there might soon be a 0,5% cut in interest rates. Little did they guess that all four major commercial banks would announce a cut of 1% in prime lending rates, which is bound to relaunch the markets come Monday morning.
The bond market strengthened, with the yield on the R150 closing in on the 16% mark.
In New York, the rate cut continued make its effects felt, pushing up stocks in early trade after its 4,2% Thursday climb. The S&P 500 index gained 10,76 points, arriving on 1,058.25. The dollar weakened further, hurt by the rate cut, pushing the rand to below R5,60 overnight.
In the Far East, the indexes went wild, with the Hang Seng soaring over 8%. The response in Europe was more muted on Friday, but nonetheless positive.
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