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Johannesburg - South African resources stocks continued to benefit from a weak rand on Monday morning, although the currency strengthened somewhat over the weekend.
By midday the resources stocks were another 1.48% higher, while the Gold index gained 2.82%.
That helped to push the All-share index 0.68% higher to 50 424 points, while the Top 40 index improved by 0.64% to trade at 45 113, establishing a firm base above the important support level of 43 600.
By midday on Monday the rand traded at R11.21 to the dollar after reaching a low of R11.27 on Friday, the weakest level since October 6, after Moody’s downgraded South Africa’s credit rating citing poor economic prospects for the country.
READ: Downgrade pours cold water on Nene's first budget
The improvement in resources stock prices is however not only the result of a weak currency, but is also of a technical improvement from extremely oversold positions.
The technical analysts of Imara SP Reid said in their daily Market Snapshot there is still room for modest technical improvement, with momentum figures at this stage showing no sign of weakness.
The dollar was knocked off its seven-year high on Friday afternoon, when the latest American jobs data was weaker than expected, dampening the prospects of a rate hike in the US.
READ: Dollar dips as rate hike hopes fade
A total of 214 000 new jobs were created in the US last month, weaker than the forecast of 235 000. The data did little to boost hopes that the US Federal Reserve would hike interest rates sooner than its mid-2015 timeline, which would support the dollar.
A weaker dollar is also good for commodity prices but market sentiment took a hit as Chinese inflation came in unchanged at 1.6% in October, well off the government's target of 3.5% and adding to fears about the strength of the world's number two economy.
Weekend data also showed growth in Chinese exports and imports slowed last month. China is an important market for South African commodities.
Gold and platinum shares, which are both extremely oversold, continued their strong comeback on Monday morning.
Among the platinum shares Anglo American Platinum [JSE:AMS] improved by 2.49% to R376.32 and Impala Platinum [JSE:IMP] gained 1.7% to R82.94.
In the gold sector AngloGold Ashanti [JSE:ANG] was another 3.87% higher, trading at R109.35 after reaching a 52-week low of R93.50 just more than a week ago. Harmony [JSE:HAR] was 3.71% stronger at R17.89 and Gold Fields [JSE:GFI] rose by 2.6% to R40.70.
Among the heavyweights in the resources sector, Anglo American [JSE:AGL] improved by 0.73% to R245.70 and BHP Billiton [JSE:BIL] was 1.15% higher at R302.15.
The financial sector also made a strong comeback after a technical correction last week and FirstRand [JSE:FSR] gained 1.27% to R46.99. The index was 0.92% stronger.
The Industrial index however did not share in the optimism and was only 0.20% stronger by midday. The index traded at 60 911 and is now approaching the significant resistance level of 61 160 which if breached, will improve technical prospects for industrial shares.
- Fin24
By midday the resources stocks were another 1.48% higher, while the Gold index gained 2.82%.
That helped to push the All-share index 0.68% higher to 50 424 points, while the Top 40 index improved by 0.64% to trade at 45 113, establishing a firm base above the important support level of 43 600.
By midday on Monday the rand traded at R11.21 to the dollar after reaching a low of R11.27 on Friday, the weakest level since October 6, after Moody’s downgraded South Africa’s credit rating citing poor economic prospects for the country.
READ: Downgrade pours cold water on Nene's first budget
The improvement in resources stock prices is however not only the result of a weak currency, but is also of a technical improvement from extremely oversold positions.
The technical analysts of Imara SP Reid said in their daily Market Snapshot there is still room for modest technical improvement, with momentum figures at this stage showing no sign of weakness.
The dollar was knocked off its seven-year high on Friday afternoon, when the latest American jobs data was weaker than expected, dampening the prospects of a rate hike in the US.
READ: Dollar dips as rate hike hopes fade
A total of 214 000 new jobs were created in the US last month, weaker than the forecast of 235 000. The data did little to boost hopes that the US Federal Reserve would hike interest rates sooner than its mid-2015 timeline, which would support the dollar.
A weaker dollar is also good for commodity prices but market sentiment took a hit as Chinese inflation came in unchanged at 1.6% in October, well off the government's target of 3.5% and adding to fears about the strength of the world's number two economy.
Weekend data also showed growth in Chinese exports and imports slowed last month. China is an important market for South African commodities.
Gold and platinum shares, which are both extremely oversold, continued their strong comeback on Monday morning.
Among the platinum shares Anglo American Platinum [JSE:AMS] improved by 2.49% to R376.32 and Impala Platinum [JSE:IMP] gained 1.7% to R82.94.
In the gold sector AngloGold Ashanti [JSE:ANG] was another 3.87% higher, trading at R109.35 after reaching a 52-week low of R93.50 just more than a week ago. Harmony [JSE:HAR] was 3.71% stronger at R17.89 and Gold Fields [JSE:GFI] rose by 2.6% to R40.70.
Among the heavyweights in the resources sector, Anglo American [JSE:AGL] improved by 0.73% to R245.70 and BHP Billiton [JSE:BIL] was 1.15% higher at R302.15.
The financial sector also made a strong comeback after a technical correction last week and FirstRand [JSE:FSR] gained 1.27% to R46.99. The index was 0.92% stronger.
The Industrial index however did not share in the optimism and was only 0.20% stronger by midday. The index traded at 60 911 and is now approaching the significant resistance level of 61 160 which if breached, will improve technical prospects for industrial shares.
- Fin24
