South African markets surged higher on Monday, boosted by strong metals prices and a global stocks rebound following a United States government rescue package for banking giant Citigroup.
Johannesburg’s resource-heavy equities market raced up almost 6%, the rand rallied 3% and government bond yields fell to new one year-lows.
The world’s fifth largest gold producer, Harmony Gold, leapt 22,11% to R81,20, pushing the Johannesburg blue-chip index 5,77% up to 17 104,81 points.
The broader all-share index rose 4,25% to 18 834,75 points.
”The market is bouncing from oversold levels [and] people are looking for reasons to buy the market,” Tubby Goodwin, a trader at Investec Securities said, adding the gold price obviously helped.
Gold jumped 3%, adding to Friday’s 7% leap.
Global equities were lifted by a US plan to pump $20-billion of new capital into Citigroup, averting a bank collapse that could have crippled the world’s financial system.
”It’s another small relief when it comes to financials in the US. It just shows how much trouble the financial sector really is in,” Goodwin said.
The rand was trading at 10,1150 against the dollar at 5.40pm, 3,2% stronger than its previous close in New York as the dollar fell against most currencies on a retreat in risk aversion. It earlier touched 10,04.
”It’s the same thing that has been driving it all along, the Dow closed up 6% and our market is up 5% … it’s driven by equity markets,” Bidvest Bank chief dealer Ion de Vleeschauwer said.
”Everybody is now happy with risk again, until tomorrow, when the Dow goes down again.” — Reuters