Election results send South Africa’s JSE soaring

South African stocks jumped the most in almost seven months, lifted by a surge in precious-metals producers as gold prices soared.

The FTSE/JSE All Share Index rose as much as 5.2%, the most since April 8, catching up with gains in global markets following the Democratic Party’s sweeping victory in the US midterm elections.

The Johannesburg bourse was shut Wednesday for a local holiday.

The US election result sent the dollar and Treasury yields lower because of expectations that the outcome may curb the Trump administration’s tax and spending plans. That triggered a surge in gold.

Lower yields tend to support bullion as it doesn’t pay interest, while a weaker dollar makes the precious metal cheaper for buyers in other currencies. 

“Precious metals have more recently become more correlated with moves in US interest rates and the dollar than geopolitical risk,” said Rowan Williams, chief investment officer at Nitrogen Fund Managers.

“We would view as also having decreased now that the Democrats control both the Senate and the House of Representatives.”

An index of precious metals miners gained 8.8%, putting it on track for its biggest daily gain since June, with AngloGold Ashanti and Gold Fields leading the advance.

Gold rose as much as 2.1% on Thursday to trade around $4,128 an ounce, after rising the most since August in the previous session.

While miners accounted for most of the session’s biggest gainers in Johannesburg, tech investor Naspers provided the largest single contribution to the benchmark index.

It climbed 13%, the most since December 2023, buoyed by improving sentiment toward Chinese stocks. 

Naspers subsidiary Prosus holds a roughly 23% stake in Tencent, China’s social media and gaming leader.

Tencent gained 7.2% in Hong Kong on Thursday. Prosus is up 4.2% in Amsterdam.

A drop of about 18% in Brent crude oil prices this week has further boosted the appeal of South African stocks, Williams said.

“The lower oil price is also improving sentiment to the metals counters as this lowers the operating costs of the miners, improving sentiment further,” he said.

The main South African index is up 6.7% on the week, easily outperforming its emerging-market peers. An index of developing nation stocks has dropped 1.3%.