Johannesburg - Share prices on the JSE rallied strongly on Tuesday morning after two previous sessions of sharp losses for no apparent reason other than investors seeing buying opportunities at current levels.
The JSE’s run is in contrast with markets elsewhere in the world, which extended losses after the oil price dropped even further with Brent trading as low as $46 per barrel, the lowest in six months.
READ: Brent ends below $50 for first time since 2009
The All-share index dropped by more than 1% on Monday on news that Eskom’s battles to provide enough electricity made a severe dent in business confidence.
On Tuesday morning it was announced that manufacturing production decreased in November by 1.3% compared to a year ago, due to the unreliable electricity supply.
But the local market ignored the bad news in morning trade with the All-share index 1.24% higher at 49 069 points, while the Top 40-index gained 1.39% to 43 070. The Financial index gained 1.60% and the Industrial index was 1.47% higher.
The share market is probably also supported by the bond market, where yields have reached the lowest levels in 19 months on expectations of lower inflation due to the soft oil price.
READ: Oil slide fuels more gains in SA bonds
The resources sector was supported by the news that China's December trade data beat expectations, as demand from a stronger US economy helped offset weakness in Europe and Japan while Chinese bargain-shopping in commodities markets put a floor under sliding imports.
South African commodity exporters are heavily dependent on Chinese demand to support commodity prices and the Resources index improved by 1.11%. The two major iron ore producers, Kumba [JSE:KIO} and Assore [JSE:ASR], both traded higher with Kumba increasing 1.94% to R224.80 and Assore gaining 4.7% to R141.35.
Anglo American [JSE:AGL] was off the 52-week low reached on Monday, recovering back to above R200 by gaining 1.35% to R200.26.
The two shares with major exposure to the oil price, Sasol [JSE:SOL] and BHP Billiton [JSE:BIL], were barely higher but above the previous day’s 52-week lows. Sasol was only 0.05 higher at R382 and BHP Billiton 0.49% stronger at R233,93.
Oil fell to the lowest level in almost six years on Tuesday morning and Brent crude was trading as low as $46 for a barrel, as the United Arab Emirates, an important member of Opec, expressed its support for Opec’s policy not to support the price by cutting production.
The low oil price is however good news for gold. The metal extended its gains to the highest level in almost 12 weeks as investors turn to gold as safe haven instead of the dollar, which is under pressure as indications are that inflation will stay low for longer which will postpone any hike in US interest rates.
READ: Gold rises to highest level since October
Oil is now 60% cheaper than the peaks hit in June 2014 and has collapsed by 36% over the last seven weeks.
The Gold index on the JSE rallied for a seventh consecutive day in the longest stretch of gains since March last year. By midday the index was another 3.47% higher after gaining 7.2% on Monday, and is now the highest since September 9 last year.
Gold mines are further supported by the fact that the rand is much weaker than a couple of months ago, which boosted the rand gold price to reach R457 907 on Tuesday morning.
Harmony Gold Mining [JSE:HAR], which advanced 11% on Monday, was another 4.27% higher on Tuesday at R32.75. The share price increased by a massive 45.3% over the last seven days and 65.2% over the last 30 days, and is now 135% above the 52-week low reached in November last year.
Gold Fields [JSE:GFI] reached another 52-week high when it gained another 1.75% to reach R68.73 by midday. The share has gained 29.52% over the last seven days and 35.5% over the last month. The current price is double the 52-week low reached in January last year.
AngloGold Ashanti, [JSE:ANG] which has been the most volatile share in the gold sector, gained a strong 5.94% on Tuesday morning to trade at R125.94. The share gained 21.3% over the last seven days and is now 35% higher than the low reached in December this year. It is, however ,still a long way off the previous 52-week high of R209.00 reached in March last year.
In the retail sector Clicks [JSE:CLS] and the Spar group [JSE:SPP] both reached new 52-week highs. Clicks is now 32.1% higher for the year after gaining 3.52% to R83.50 at midday. Spar was 2.14% stronger at a new high of R170.06, and has gained 32.1% for the past year.
In the food sector Pioneer Foods [JSE:PFG] was only 0.17% higher at R150.24, but it was enough to reach a new 52-week high. Astral Foods [JSE:ARL] set yet another record when it gained 2.03% to R193.85. The share is now 97.3% higher for the year.
The JSE’s run is in contrast with markets elsewhere in the world, which extended losses after the oil price dropped even further with Brent trading as low as $46 per barrel, the lowest in six months.
READ: Brent ends below $50 for first time since 2009
The All-share index dropped by more than 1% on Monday on news that Eskom’s battles to provide enough electricity made a severe dent in business confidence.
On Tuesday morning it was announced that manufacturing production decreased in November by 1.3% compared to a year ago, due to the unreliable electricity supply.
But the local market ignored the bad news in morning trade with the All-share index 1.24% higher at 49 069 points, while the Top 40-index gained 1.39% to 43 070. The Financial index gained 1.60% and the Industrial index was 1.47% higher.
The share market is probably also supported by the bond market, where yields have reached the lowest levels in 19 months on expectations of lower inflation due to the soft oil price.
READ: Oil slide fuels more gains in SA bonds
The resources sector was supported by the news that China's December trade data beat expectations, as demand from a stronger US economy helped offset weakness in Europe and Japan while Chinese bargain-shopping in commodities markets put a floor under sliding imports.
South African commodity exporters are heavily dependent on Chinese demand to support commodity prices and the Resources index improved by 1.11%. The two major iron ore producers, Kumba [JSE:KIO} and Assore [JSE:ASR], both traded higher with Kumba increasing 1.94% to R224.80 and Assore gaining 4.7% to R141.35.
Anglo American [JSE:AGL] was off the 52-week low reached on Monday, recovering back to above R200 by gaining 1.35% to R200.26.
The two shares with major exposure to the oil price, Sasol [JSE:SOL] and BHP Billiton [JSE:BIL], were barely higher but above the previous day’s 52-week lows. Sasol was only 0.05 higher at R382 and BHP Billiton 0.49% stronger at R233,93.
Oil fell to the lowest level in almost six years on Tuesday morning and Brent crude was trading as low as $46 for a barrel, as the United Arab Emirates, an important member of Opec, expressed its support for Opec’s policy not to support the price by cutting production.
The low oil price is however good news for gold. The metal extended its gains to the highest level in almost 12 weeks as investors turn to gold as safe haven instead of the dollar, which is under pressure as indications are that inflation will stay low for longer which will postpone any hike in US interest rates.
READ: Gold rises to highest level since October
Oil is now 60% cheaper than the peaks hit in June 2014 and has collapsed by 36% over the last seven weeks.
The Gold index on the JSE rallied for a seventh consecutive day in the longest stretch of gains since March last year. By midday the index was another 3.47% higher after gaining 7.2% on Monday, and is now the highest since September 9 last year.
Gold mines are further supported by the fact that the rand is much weaker than a couple of months ago, which boosted the rand gold price to reach R457 907 on Tuesday morning.
Harmony Gold Mining [JSE:HAR], which advanced 11% on Monday, was another 4.27% higher on Tuesday at R32.75. The share price increased by a massive 45.3% over the last seven days and 65.2% over the last 30 days, and is now 135% above the 52-week low reached in November last year.
Gold Fields [JSE:GFI] reached another 52-week high when it gained another 1.75% to reach R68.73 by midday. The share has gained 29.52% over the last seven days and 35.5% over the last month. The current price is double the 52-week low reached in January last year.
AngloGold Ashanti, [JSE:ANG] which has been the most volatile share in the gold sector, gained a strong 5.94% on Tuesday morning to trade at R125.94. The share gained 21.3% over the last seven days and is now 35% higher than the low reached in December this year. It is, however ,still a long way off the previous 52-week high of R209.00 reached in March last year.
In the retail sector Clicks [JSE:CLS] and the Spar group [JSE:SPP] both reached new 52-week highs. Clicks is now 32.1% higher for the year after gaining 3.52% to R83.50 at midday. Spar was 2.14% stronger at a new high of R170.06, and has gained 32.1% for the past year.
In the food sector Pioneer Foods [JSE:PFG] was only 0.17% higher at R150.24, but it was enough to reach a new 52-week high. Astral Foods [JSE:ARL] set yet another record when it gained 2.03% to R193.85. The share is now 97.3% higher for the year.