(Bloomberg) — South African stocks rallied the most in two months, led by Assore Ltd., and bond yields fell after the U.S. Federal Reserve signalled interest rates will increase slower than previously forecast.
The FTSE/JSE Africa All Share Index climbed 1.6 percent, the biggest advance since Jan. 15, to 52,998.35 as of 3:05 p.m. in Johannesburg. Assore, which owns iron-ore and manganese mines, jumped the most since June 1999. Sasol Ltd., the world’s largest producer of motor fuel from coal, rose for a third day, while Kumba Iron Ore Ltd. gained for the first time in five days.
The Fed cut its estimate for where the benchmark U.S. interest rate will be by the end of 2015, easing concern that tighter monetary policy would curb demand for riskier assets. Central banks in Europe and Asia have been stepping up stimulus this year. South Africa’s rand weakened on Thursday after rallying the most since June 2013. Yields on rand-denominated government bonds due December 2026 fell the most since Aug. 26, dropping 12 basis points to 7.77 percent.
“People were expecting more rhetoric towards interest rates increasing sooner,” Byron Lotter, a money manager at Johannesburg-based Vestact Ltd., which has 2.1 billion rand ($171 million), said by phone from Johannesburg. “Stocks like Assore, Kumba and Sasol, those single-commodity stocks, are inherently volatile to news like that.”
Assore surged 23 percent to 131 rand. The stock had dropped 36 percent in the two weeks through March 16, pushing its 14-day relative strength index fell to 16.7 on that day, the lowest since Oct. 2014, and below the 30 level which indicates it may be oversold. About 486,500 shares changed hands, which is 2.5 times the three-month daily average in volumes.