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Johannesburg - Kumba’s share price continued with its amazing recovery on the JSE on Tuesday on the back of a stronger iron ore price, but it was not enough to push the major indices into the black.
It seemed that local investors, who were off for Freedom Day on Monday, missed out on the strong run in emerging markets, with the Chinese market hitting new highs.
World markets on Tuesday tracked Wall Street’s cautious standing when investors on Monday night went on the defensive ahead of this week’s Federal Reserve open market committee meeting on US interest rates.
READ: US stocks snap record-setting rally
The general consensus is that the Fed will wait a little bit longer to raise US interest rates which will put the dollar under pressure, but investors adopted a wait-and-see attitude.
The JSE All-share index, which closed on a record of 55 188 points on Friday, opened even higher on Tuesday morning on 55 252 points, but by midday was 0.32% lower on 55 009.
All the record breaking indices of the past few days were lower. The Top 40-index lost 0.46% to 48 742 points, the Financial index was 0.41% lower and the Industrial index gave up 0.79%.
The Resources index, however continued its resurgence of last week with the index gaining another 0.89% to 44 644 points, which means that the index has risen about 8% since April 18 when it was trading at 40 944 points.
The dramatic rise in Kumba’s share price of 21% over the last week, of which almost all happened over the last two trading sessions, contributed towards the strong Resources index, but the index is also supported by the weaker dollar and expectations that China will announce more measures to stimulate the Chinese economy.
Those expectations pushed the Chinese market to an all time high on Monday.
China is still the most important markets for South African commodities.
READ: Asian stocks mostly down, weak yen boosts Tokyo
Kumba [JSE:KIO] continued its meteoric recovery on Tuesday, gaining another 7.81% to R172.17 after it rose almost 11% on Friday. The driving force behind the strong run is a surge in the iron ore price, which reached almost $US60 a tonne on Tuesday.
Earlier this month, the iron ore price was at a 10-year low of $US46.70 a tonne.
The price increase is due to increased buying from Chinese iron ore mills and the news last week that BHP Billiton [JSE:BIL] have postponed a major expansion project in Australia.
Kumba’s holding company, Anglo American [JSE:AGL], shared in the excitement and traded 1.32% higher on R202.04. The share is now 7% higher over the past week.
BHP Billiton traded 0.54% lower on R287.16. The company is also listed in Australia where the big surge in the share prices of iron producers occurred already on Monday.
The Gold index increased with 3.2% on Tuesday after the gold price held onto the biggest gain in almost three months to trade near $1 200 an ounce. Gold climbed on Monday on speculation the US central bank may wait longer before raising rates helped to send the dollar to a seven-week low.
Amongst the top gold shares, which all gained more than 4%, were Anglogold Ashanti [JSE:ANG] (+4.25%), Harmony (+4.09%) and Gold Fields (+4.08%).
