Run in resources lifts JSE

Johannesburg - The swing towards resources stocks on the JSE has gained momentum on Tuesday, which pulled the market substantially higher.
 
By midday, the Resources index was already 3.57% higher and the Gold index, which improved by 31% in January, added another 4.63%.
 
This boosted the All-share index 1.18% to 51 999 points, with the Top 40-index gaining 1.26% to 45 760 points. The Financial index was also stronger with Standard Bank [JSE:SBK] and FirstRand [JSE:FSR] on new highs, but the Industrial index with the big market capitalisation shares hardly moved.
 
The oil price continued with its steady recovery on Tuesday morning and Brent traded above $56.00, but the fundamentals for resources shares have otherwise not changed much. Investors are however beginning to think that these shares, which have lost over 30% of their value over the past few months, are again offering value at very attractive price to earnings ratios and dividend yields.
 
A typical example is Sasol [JSE:SOL] which is trading at a price to earnings ratio of 7 and a dividend yield of 5.1% with tremendous upward potential if the oil continues to recover, because its income is directly linked to the price of crude.
 
The share price gained another 2.77% to R462.48 and the stock is now almost R100 higher than the 52-week low of R365.10 which was reached on January 14 this year. Sasol gained 11.8% over the last seven days but the price is still 27.3% lower for the last three months.
 
The oil price has increased steadily since the weekend on indications that the low price is beginning to curtail oil production in America, which is exactly what Opec tried to achieve by not capping oil production in an attempt to stabilise the price.
 
China announced disappointing manufacturing data which can have a negative influence on the demand for commodities, but this time it did not affect resources shares.
 
Anglo American [JSE:AGL] improved by 2.87% to R201.71 and BHP Billiton [JSE:BIL], which is also an oil and gas producer, gained 3.81% to trade at R268.45. Glencore [JSE:GLN] was 3.07% stronger at R45.30 and African Rainbow Minerals [JSE:ARI] gained 3.73% to R124.05. Even Kumba [JSE:KIO], which lost more than half its value over recent months, gained 5.30% to R231.70.
 
The gold rush on the JSE continued on Tuesday morning, after the gold price rose for the second day on indications that the world’s biggest gold fund is increasing its holdings. Analysts said bad economic data from China and the United States are strengthening gold’s status as a safe haven, now that it seems reasonably certain that American interest rates will not rise soon.
 
The biggest mover today was Sibanye [JSE:SGL] which increased by 6.05% to reach yet another high of R33.66. The share is now 43.6% higher for the past three months and 87.6% for the past year.
 
Gold Fields [JSE:GFI] also reached another 52-week high with the share price gaining 3.32% to reach R69.16. As recently as November 5 last year, the share traded at a 52-week low of R35.99. The gain over the past three months is now 46.2% and 73.9% for the past year.
 
Anglogold Ashanti [JSE:ANG]was 5.51% higher after trading at a low of R91.95 on December 17 last year. Although the share gained 41% over the past 30 days, it is still 14.5% lower for the year.
 
In the financial sector Standard Bank [JSE:SBK] gained 3.77% to reach another 52-week high of R158.93. The share is now 32.1% higher for the past year.
 
FirstRand [JSE:FSR] just managed to breach the previous 52-week high of R52.43, rising 2.83% to R52.83. Investors in FirstRand, which boasts with the highest return on capital in the banking sector, have been richly rewarded with a 69.3% return over the past 12 months.