Johannesburg - Acquisition talks between two pharmaceutical giants and a weaker rand‚ which favours dual-listed stocks‚ led the JSE to post strong gains on Tuesday.
At 17:00‚ the JSE All Share [JSE:J203] index was 1.69% higher at 41 003.25 points. Broad gains were made across all sectors‚ with the exception of gold‚ as the market played catch up from lost trade on Monday due to the public holiday. Market participants were also gearing up for futures close-out on Thursday.
European markets found some support from a slight increase in investor confidence in Germany. The German ZEW survey showed investor sentiment rose 2.1 points to 38.5 in June spurring hope of a recovery in Europe’s biggest economy.
By 16:54 London’s FTSE 100 had added 0.84%.
Across the Atlantic‚ US equities kicked off to a good start with the Dow Jones industrial average up 0.74% at 5.52pm local time‚ as official economic data for the month of May showed consumer inflation remained relatively in check‚ edging up 0.1% with housing starts jumping 6.8% to 914‚000.
Markets eagerly await the outcome from the Federal Reserve’s Open Market Committee meeting which began on Tuesday. Bernanke’s decision to taper or not to taper monetary easing is expected to be announced at the end of the two-day policy meeting on Wednesday.
Finance Minister Pravin Gordhan warned in the National Assembly on Tuesday that Bernanke’s speech could cause “shock waves” this week similar to those that struck two weeks ago that saw the all share drop below the key 40‚000-point level and the rand reach four year lows against the dollar.
On the JSE the banking index lifted 3.13%‚ financials were up 2.43% and industrials added 1.94%.
Africa’s largest pharmaceutical manufacturer‚ Aspen (APN) issued a cautionary statement earlier in the day saying it was engaged in talks with global healthcare group GlaxoSmithKline with respect to acquiring some of the latter’s operations.
“We expect Aspen to significantly enhance its earnings should the transaction be approved by shareholders‚” a local trader said. “It is a very defensive stock and should continue to perform well.”
Aspen closed up 4.44% to R193.25
Renewed volatility in the currency market saw the rand creep weaker than R10/$. Benefactors from this move included luxury goods manufacturer Richemont (CFR)‚ which added 2.95% to R92.27‚ and SABMiller (SAB)‚ which gained 2.24% to R510.19.
Gold miners lost 2.06%‚ falling along with the lower gold spot price‚ which was down 1.51% to $1‚363.12 an ounce at 5.09pm local time.
Harmony (HAR) was the biggest loser in the sector‚ shedding 5.67% to R36.44. The gold miner issued a statement in the late afternoon‚ saying it was compiling its 2014 business plan and that a write down of a portion of the carrying value of its Hidden Valley operations in Papua New Guinea was likely‚ due to its recent poor performance and the reduction in US dollar gold and silver prices.
AngloGold Ashanti (ANG) gave up 1.90% to R159.05 and Pan African Resources (PAN) was down 4.17% to R2.07.
Retailers enjoyed a good run as “managers are still favouring retail shares on the hopes that there is still value to be had from the likes of Shoprite and other retailers who are entering the broader African market‚” the trader said.
Shoprite (SHP) added 2.18% to R181.63‚ Mr Price (MPC) was up 2.15% to R126.03‚ while Spar (SPP) bucked the trend‚ shedding 1.09% to R113.
In industrials investment holding company Remgro (REM) closed up 4.97% at R188‚ Bidvest (BVT) improved 4.01% to R240.86 and AECI (AFE) gained 2.60% to R112.50.
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