/ 20 November 1998

CPI ignites markets

SARAH BULLEN, Johannesburg | Thursday 5.45pm.

THURSDAY brought a pleasant change to the directionless few days on the Johannesburg Stock Exchange, with all indices ending in positive territory.

Dealers said the market responded well on news of a 0,1 percentage point drop in the Consumer Price Index to 9%, pleasantly surprising the market which had settled on a 9,1% prediction.

“The CPI was undeniably, the day’s catalyst,” one dealer said, as the downward trend in inflation should bode well for interest rates. A boost on the day also came from United States’s benchmark futures contract, the S&P 500, which was trading up for most of the day.

While there were no fireworks on the market, dealers said, the firmer undertone was a pleasant change to the drifting earlier in the week. At close of trade the all share index was up just under 0,5%, driven mainly by a 3,37% climb in the all gold index as the gold price continued to firm. Platinum shares gave a strong performance as the palladium price firmed. The industrial index ended up 0,44%, while the financial index managed to hold its ground to gain 0,05%.

Reaction from the CPI filtered into the bond market giving the R150 a significant boost. The R150 gained 32 basis points to slip under the 16% benchmark yield to offer 15,95% at around 4.30pm. After slipping a bit in morning trade, the rand held its own against the dollar to trade at R5,64 at 4.30pm — gaining ground as the dollar softened in the afternoon.