The Johannesburg Stock Exchange (JSE) experienced a noteworthy surge on Wednesday, hitting a one-week high, while the rand strengthened to its most robust level in seven days.
The gains are largely attributed to rising hopes that Canada and Mexico may reach a compromise with the United States, steering clear of retaliatory measures in response to newly imposed tariffs.
The JSE All Share Index rose more than 1% to 87 679 index points by 5pm, buoyed by resources stocks, particularly platinum mining stocks.
Impala Platinum soared 9.5% to R103.74 per share, followed by Northam Platinum and Anglo American Platinum at 8.3% and 6.0% to R8.77 and R35.83 per share, respectively.
Harmony Gold stocks also rose 6.0% to R197.00 per share as the price of gold continued to rise close to record levels.
Gold hovered around $2 900 per ounce on Wednesday supported by a weaker US dollar and safe-haven demand amid the implementation of US tariffs.
Further boosting gold’s safety appeal, the US paused military aid to Ukraine amid reports of potential sanctions relief for Russia.
US President Donald Trump's 25% levies on Mexican and Canadian imports took effect Tuesday, alongside a hike in Chinese duties to 20%, escalating trade tensions and prompting retaliation.
However, Neil Wilson, analyst at TipRanks.com, said Trump’s speech to Congress on Tuesday night showed no concern around tariffs.
US Commerce Secretary Howard Lutnick suggested possible tariff relief for Canada and Mexico.
“Commerce Secretary Howard Lutnick however suggested Trump will “probably” announce a compromise with Canada and Mexico as early as Wednesday. It’s all rather chaotic and hard to navigate, which is pushing up volatility,” Wilson said.
“The big question is whether tariffs stay around – I think broadly there is a sense that whether it’s today or in a few weeks 25% tariffs on its two biggest trading partners combined with retaliation by Canada and likely too by Mexico will be enough for Trump to find a deal.”
Meanwhile, the rand strengthened 0.5 to R18.53 to the US dollar, supported by rising prices of gold and positive domestic data showing the economy returned to growth in the fourth quarter of 2024.
The dollar index has fallen to its lowest point since the US election results in November 2024.
The country's gross domestic product (GDP) grew by 0.6% in the three months to December, recovering from a revised 0.1% contraction in the prior quarter, though it fell short of the 0.9% rebound anticipated by markets.
“The rand has followed the trend of a weaker dollar, trading back to the levels we saw last week,” said Wichard Cilliers, director and head of market risk at TreasuryONE.
“Sustained pressure on the dollar could lead to the rand breaking below the R18.30 mark, which it struggled to break a couple of times during February.”
BUSINESS REPORT