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Johannesburg - Modest economic data in the US gave the JSE a boost on Thursday as a weaker dollar supported commodity prices and resources shares.
Disappointing retail sales in the US strengthened the notion that the Federal Reserve will definitely not increase interest rates in the US before next year, which not only put a damper on Wall Street but also weakened the dollar which was good news for resources shares.
The Resources index was therefore the star performer on the JSE on Thursday, gaining 1.13% by midday with the Gold index 2.68% up. Platinum traded above $1 000 per ounce for the first time in weeks and the gold price is again approaching $1 200/oz, with the yellow metal trading at $1 183/oz shortly before midday.
The rest of the market also moved modestly higher, but analysts warned that industrial shares in particular are still overbought and prone to profit-taking. The Industrial index was only 0.15% higher, while the Financial index gained 0.55%.
That meant that that the All-share index was 0.36% higher at 53 252 points, while the Top 40 index traded 0.32% stronger at 47 765 points. Although the market was very subdued this week, the All-share index is still 1.9% stronger over the past seven days and 7.68% over the past 30 days.
The latest US retail sales proved to be quite a shock to Wall Street as sales growth was just 0.1%, while core retail sales were actually weaker by 0.3% with the previous month's data also having been downgraded slightly.
The Federal Reserve’s Beige Book survey indicated that the US economy continued only a moderate expansion in most regions across the world’s largest economy.
The result was that the yield of ten-year US bonds fell to below 2% as the market seems to have greater certainty that there will be no further interest hikes this year.
Platinum shares in particular pushed the Resources index higher, with Lonmin [JSE:LON] on the run again and Northam [JSE:NHM] trading more than 8% stronger. Lonmin gained another 7.69% to trade at R7.70, which means the share price is now 31.19% higher than seven days ago. It is however still 73.5% softer over the past 90 days.
Northam did not perform as strongly and gained only 6.43% over the past seven days, but traded 8.82% stronger on Thursday at R35.67.
Among the big conglomerates Anglo American [JSE:AGL] traded 1.4% stronger at R141 and BHP Billiton [JSE:BIL] was 0.63% stronger at R238.91.
British multinational asset management company Schroders recently said Anglo American is one of the global miners poised to make a good recovery. In the past four years Anglo’s shares have fallen by 80% to levels last reached in February 2009, when the price dropped from R525.90 to R142.00 as markets around the world tanked.
Schroders said its fund managers don’t get too swayed by the headlines, focusing instead on exploiting extreme under-valuations in stocks. Anglo American has recovered 12.78% over the past seven days.
SABMiller [JSE:SAB] lost ground on Thursday morning for the first time after the announcement of a merger with Anheuser-Busch InBev, and traded 1.10% lower at R808.17.
Mediclinic [JSE:MDC], which announced details of a merger with Middle East hospital group Al Noor on Wednesday, traded 0.45% stronger at R114.32. The price was at one stage 5.5% higher on Wednesday.
Alexander Forbes [JSE:AFH] was the busiest share on the JSE in terms of volume on the news that Amcu, the union that led a five-month strike at the South African operations of the world’s biggest platinum producers, appointed the group to start a provident fund for its members. The share price however hardly moved and by midday was 0.13% lower at R7.88.
