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JSE higher on expectation of stimulus

Apr 29 2013 10:27
I-Net Bridge
Johannesburg - The JSE was higher on Monday morning as investors backed risk assets on expectation of further stimulus from central banks‚ with gains in local resources and platinum counters offsetting losses in the gold mining sector.

The gold index continued Friday’s retreat after good gains last week.

At 9:25 the JSE All Share [JSE:J203] index was up 0.35% at 39 219.51 points‚ with the blue-chip Top 40 - (Tradeable) [JSE:J200] index up 0.42%.

The resources and platinum indices rose 0.74% and 0.63% respectively‚ while the gold index retreated 1.84%.

“By now we know the markets for risk assets perform well when participants are comfortable that central banks will continue to keep the stimulus taps wide open to support economic growth‚” Rand Merchant Bank said in a morning note.

“The policy statements by the FOMC (the US Federal Open Markets Committee) on Wednesday and the European Central Bank (ECB) on Thursday this week will most likely support our assessment‚” RMB said. “In fact‚ the ECB will probably cut its policy rate by at least 25 basis points this week.

“The release of disappointing first-quarter growth figures in the US rounded off a week in which most growth indicators undershot market expectations. The 2.5% quarter-on-quarter growth rate registered by the world’s biggest economy underscored the fact that the US government will weigh down on the country’s growth performance‚ despite a private sector that is performing well.

“Disappointing growth numbers should keep the Fed dovish‚” the bank said.

Asian markets were slightly higher on Monday‚ with Japanese and Chinese markets closed for holidays‚ and European markets opened with mild gains.

It is a busy week on the local data front‚ despite the midweek public holiday.

The South African Reserve Bank is scheduled to release March money supply and credit numbers on Tuesday morning.

“We expect a moderation in both M3 and private sector credit extension growth‚ in particular corporate credit growth‚” RMB said.

On the JSE‚ mining giant BHP Billiton (BIL) gained 1.15% to R258.31 and Sasol (SOL) climbed 1.25% to R393.11.

Platinum player Lonmin (LON) recovered 1.46% to R40.18‚ while Royal Bafokeng (RBP) bucked the trend‚ falling 3.76% to R51.

ArcelorMittal SA (ACL) was up 1.29% at R24.35‚ while Kumba Iron Ore (KIO) slipped 0.53% to R471. Coal of Africa (CZA) jumped 4.79% to R1.75. 

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