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Resources stocks pull JSE lower

Johannesburg - The correction on the JSE, which started on Monday, continued on Tuesday, with resources stocks pulling the All-share index lower.

The big culprits were BHP Billiton [JSE:BIL] and Anglo American [JSE:AGL].

On the positive side, gold shares performed better than the previous day.

By midday, the All-share index was 0.61% lower at 50 746 points, while the Top 40-index lost 0.73% to 45 717 points. The Financial 15-index was 0.5% lower, while the Industrial index was only 0.1% weaker after Naspers [JSE:NPN] recovered strongly from the previous day’s losses.

The Resources 10-index was however more than 1% weaker than the previous close, with shares in BHP Billiton and Anglo American both losing about 1.5% in value.

The firmer rand, at R10.55/$ the strongest it has been in two weeks, was mostly to blame for the dip in resources stocks.

The currency market received only good news over the past week: a smaller than expected deficit on the current account, news that international interest rates will remain low for a long time to come and the end of the platinum strike were all positives.

BHP Billiton was also hit by reports on Tuesday in Australia and London that the company is planning to cut more than 3 000 jobs at its flagship Australian iron ore division as a way to reduce costs amid lower ore prices.

Increased iron ore supply from major producers in Australia and Brazil has overwhelmed Chinese demand, leading some companies to offer large discounts for lower grade ores.

Anglo American is also a big producer of iron ore through its investment in Kumba Iron Ore [JSE:KIO]. Kumba traded 0.81% lower at R345.67 and is now 21.1% lower than 12 months ago.

Sasol [JSE:SOL], one of the resources stocks which is heavily influenced by the exchange rate, lost 0.92% to R632.70.

The continued improvement in the gold price (+0.5% at $1 324) pushed the Gold index 0.88% higher, while the Platinum index was virtually unchanged as news about the end of the strike was mostly discounted on Monday.

Harmony [JSE:HAR] added 0.31% to R31.87, while Gold Fields [JSE:GFI] improved 0.80% to R40.22.

Platinum shares showed a subdued reaction to the end of the strike and Anglo American Platinum [JSE:AMS] lost 0.20% to R496.99, while Impala Platinum [JSE:IMP] improved 0.22% to R114.50.

Naspers [JSE:NPN], which pulled the Industrial index and the market down on Monday when it lost more than 5% after the group announced results that disappointed the market, recovered strongly on Tuesday. By midday it was 2.49% higher at R1 236.98.

 - Fin24
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Rand - Dollar
18.88
+0.3%
Rand - Pound
23.85
+0.2%
Rand - Euro
20.39
+0.2%
Rand - Aus dollar
12.33
+0.1%
Rand - Yen
0.12
+0.2%
Platinum
908.05
0.0%
Palladium
1,014.94
0.0%
Gold
2,232.75
-0.0%
Silver
24.95
-0.1%
Brent Crude
87.00
+1.8%
Top 40
68,346
0.0%
All Share
74,536
0.0%
Resource 10
57,251
0.0%
Industrial 25
103,936
0.0%
Financial 15
16,502
0.0%
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