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Johannesburg - The major indices on the JSE all traded at new all-time highs on Thursday, although the reasons for the run in share prices sometimes defy logic.
There is currently quite a lot of bad news around, but the market seems able to put a positive spin on everything.
The rand is sharply down against most currencies, the dollar is strong again on new expectations that US interest rates might rise soon after solid data on the US property market, the Chinese economy continues to struggle, business confidence in Europe is still low and there is no solution in sight for the Greek debt crisis.
Despite this the All-share index, the Top 40-index as well as the Financial 15-index and the Industrial 25-index traded at new highs on Thursday morning. Even the resources sector was 0.35% higher, despite the strong dollar and poor manufacturing data from China, both perceived as bad for resources stocks.
By midday the All-share index was 0.42% higher at 54 515 points, beating Wednesday’s record close of 54 242 points. It opened higher at 54 467 points and after a temporary mid-morning slip continued on its upward path.
The Top 40-index was firmly above 48 000 - regarded by some analysts as an important resistance level - and traded 0.50% higher at 48 237.67 points.
The Industrial index, which broke though the 68 000 level last week, is now firmly above 69 000 points and traded at a record 69 211 points. It opened just below the 69 000 level at 68 937 points.
The Financial index was 0.55% higher on a new high of 17 908.77, easily beating the previous best of 17 812 points.
With the rand softer at R12.22 for a dollar and weakening against most currencies, even the embattled euro, it was mainly companies with vast overseas interests which pushed the JSE higher on Thursday morning.
Among JSE-listed companies with international interests, Naspers [JSE:NPN] was 0.1% higher at R1 916.89 and SABMiller [JSE:SAB] gained 0.58% to R657.44. MTN [JSE:MTN] gained 1.89% to R230.58 as the market seemed less concerned about a backlash in Africa to xenophobic violence in South Africa.
Richemont [JSE:CFR] was however 0.92% softer on a trade announcement on Wednesday that the Swiss company’s net profit for the year ended March 31 is expected to fall by 36%. This is mainly due to non-cash, mark-to-market losses on financial instruments, which were caused by the strengthening of the Swiss franc. Investors were also disappointed in the sales growth of only 5%.
Amongst the banking shares, Standard Bank [JSE:SBK] increased by 0.55% to R175.14 and Barclays Africa [JSE:BGA] was 0.57% stronger at R190.64.
By midday FirstRand [JSE:FSR] traded only 9c below its high of R57.91, gaining 0.56% to R57.82.
Capitec [JSE:CPI], which gained more than 5% on Wednesday to reach a new high of R580, by Thursday midday was 1.88% lower at R569.07.
Resources shares should have been lower on news that the preliminary purchasing managers' index (PMI) of manufacturing activity in China had slipped to a 12-month low in April, but the news is being discounted as a sign that the Chinese authorities will stimulate the world’s second-biggest economy even further.
The latest PMI reading of 49.2 is down from the 49.6 seen in March and well below the 50 break-even point that separates growth from expansion.
Anglo American [JSE:AGL] announced on Thursday that it will maintain its iron ore output plans this year, even as prices more than halved and production rose 18%. This means the oversupply will continue, but Anglo’s share price gained 0.59% to R186.72.
It subsidiary Kumba [JSE:KIO], which contributes about 80% of Anglo’s iron ore production, rose sharply and traded 3.59% higher at R138.00. Kumba said in a separate statement that further initiatives are being taken to reduce capital expenditure and lower production costs.
BHP Billiton [JSE:BIL], which had the same message about its iron production on Wednesday, gained 1.31% on Thursday to trade at R274.53.
