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Resources shine on JSE

Johannesburg - Resources stocks continued their strong run on Thursday morning on expectations of strong economic growth in the world’s two biggest economies, the US and China.

The Resource index gained 1.24% in morning trade on Thursday, which pushed the All-share index above the 52 000 level, after starting the week below 51 000 points.

Growth expectations after strong economic data from both the US and China this week are supporting metals prices. That pushed resources giant BHP Billiton [JSE:BIL] to a new 52-week high on Thursday morning, while the other major players Anglo American [JSE:AGL] and Glencore [JSE:GLN] are not far from their previous highs.

By midday the All-share index was 0.31% higher at 52 043, while the Top 40 index improved by 0.37% to 47 061 points.

These gains were due to the resources sector, as the other indices were all lower or only marginally higher.

Attention will however be focused on the US on Thursday afternoon, as the latest payroll data will be announced. Markets have high expectations that the US economy has created more than 200 000 jobs for the fifth consecutive month.

If it does not happen, a temporary correction is a strong possibility, particularly with US markets closed for a holiday on Friday.  

Metal prices are however in a bullish mood and copper climbed to its highest level in more than four months on Thursday, on expectations that a recovery in the economies of the United States and top consumer China will help spur demand for industrial metals.

Zinc hit its highest level in nearly three years, lifted by tightening supplies.

The platinum price also reached a ten-month high after robust motor sales in the US raised the possibility of a shortage on the metal.

A five-month strike by South African platinum miners did little to lift prices, as industrial users tapped into above-ground stocks and investors stayed on the sidelines. But analysts said when prices did not tumble after the resolution of the strike last week, buyers were encouraged.

"There's a growing realization that production is going to be weaker for some time," Macquarie analyst Matthew Turner said.

BHP Billiton was the star performer on Thursday and the share price improved by 1.5% to R367.04 - higher than the previous record of R362.14 set in February this year.

Anglo American was 2.44% stronger at R279.07 and is on its way to the record of R286.70 which was also set in February. By midday Glencore was only 7c lower than the previous record when the share price gained 1.18% to R62.79.

Anglo American Platinum [JSE:AMS] responded to the stronger platinum price and improved by 2.24% to R498.52.

Naspers [JSE:NPN] is also on its way to a new record and the share rose by 1.43% to R1 350.51, just below the record of R1 354.09 set in March this year.

Furniture retailer and maker Steinhoff [JSE:SHF] was the busiest share of the morning in terms of volume and value, after the company announced that its bookbuild of new Steinhoff ordinary shares was fully subscribed and had raised R7.8bn.

It also proposed a rights issue of 350 million shares which could raise as much as R19bn. Half of the company's existing shareholders have agreed to renounce their rights to allow the company to raise international funds in preparation for a Frankfurt listing, Steinhoff said.

The share price dropped 5.76% to R55.64 as the bookbuild was completed at a price of R52 per share, lower than expected.

 - Fin24
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