Publications
Partners
Johannesburg - A reversal in the oil price, which calmed the bond market, gave equities a boost on Friday and the JSE was no exception. A strong performance by the London share market after the Conservative Party’s surprising election victory also helped the JSE.
After two days of sharp losses the All Share-index on the JSE opened more than 700 points or 1.3% higher than Thursday’s close and hold onto most of those gains during the morning’s trade.
By midday, the All Share-index was still 1.10% higher on 53 821 points. The Top 40-index was 1.20% stronger on 47 783 points and all the other major indices were higher. The Resources index traded 2.62% higher, the Industrial index 0.92% and the Financial index 0.79%.
Share prices were under severe pressure the last few days as investors sold government bonds and as long term interest rates were rising. Much of the selling was due to expectations that the recovery of 50% in the oil price could be inflationary and could bring an end to deflation fears in Europe in particular.
The price of US oil dropped to below $60 per barrel and Brent crude close more than $2 down in London on Thursday.
The recovery in the oil price was based on expectations that the low prices will lead to a steady decline in US production which could pave the way for an easing of a global supply glut that has depressed prices since last year.
The latest supply data however put an end to those expectations as dealers digested data showing US crude-oil production slipped only marginally by 4 000 barrels to 9.4 million barrels a day.
The run in the oil price was started by data showing US crude reserves tumbled by 3.9 million barrels in the week to May 1, the first decline in 16 weeks, but the current commercial crude stockpiles of 487 million barrels are still more than 100 million barrels above the five-year average for this time of the year.
Wall Street started the recovery in share prices and the markets in London received another boost on Friday when it became clear that the market friendly Conservative Party will be returned to power with an outright majority in this week’s British general election.
Most of the big double listed shares on the JSE, which is also listed in London, benefited from the strong run of the UK market.
SABMiller [JSE:SAB] was one of the star performers on Friday as the share price gained 3.06% to R665.71 on the JSE and the share was also one of the best performers on the FTSE-index in London.
The international group announced that the volume of lager that it sold worldwide rose 2% in the quarter ended March 31. Its troubled US interests also performed well. MillerCoors’ first quarter underlying net income grew 4.4% versus the same period in the prior year to $304.6m. This income growth was driven by higher net pricing, positive sales mix and strong cost control.
British American Tobacco [JSE:BTI] also benefited from the gains in London and traded 2.43% higher of R670.93.
In the resources sector, which was 2.62% higher, double listed giants such as Anglo American [JSE:AGL] traded 3.36% higher on R207.24 and BHP Billiton [JSE:BIL] was3.07% at R289.36.
