SARAH BULLEN, Cape Town | Friday 5.00pm
VOLATILE local markets took a knock on Friday despite welcoming a strong opening of Parliament speech by President Thabo Mbeki.
Just an hour before market closed, however, the bullion price unexpectedly surged to $295 catching dealers off guard. The JSE was just in time to catch the run and the all gold index piled on a meaty 3,13%, with heavyweight gold shares basking in the demand. Dealers said they are still not sure what sparked gold’s sudden rally, with early indications suggesting it was options action out of New York.
Gold shares, however, were the only gainers in an otherwise puzzling day of trade that saw the market lose 1,18% overall.
Dealers were quick to point out that the fall in the market, coinciding with Mbeki’s speech was unrelated to the content of the speech itself — which was generally well received by economists and business.
“The market started falling on all sorts of other technical factors,” said BJM dealer Andile Mazwai.
International markets were grimacing after US long bond yields bottomed out on Thursday on technical reasons. The impact was also felt in Europe where hedge funds were also caught short and were forced to take losses as the yield curve inverted. London’s FTSE-100 was sharply down in early trade before pulling back to a 1,53% dip by afternoon. “It was a question of grabbing the tail of the tiger and riding it,” said Mazwai.
The JSE’s all share index closed the day 1,18% down, with falls in the financial and industrial indices of 1,89% and 1,41% respectively.
Also puzzling dealers on the day was a fall in the rand to R6,30 to the dollar before it clawed back two cents to R6,28.