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Johannesburg - Commodity shares were back in the spotlight on the JSE on Wednesday, after good inflation data from China raised hopes that the worst might be over for the world’s second-biggest economy and the biggest buyer of South Africa’s commodities.
With commodities such as gold, platinum, copper and oil all trading higher, the Resources index by Wednesday mid-morning was more than 2.7% higher, while the Gold index rebounded strongly with a gain of 5.01%.
These shares pulled back sharply last week on indications that the recent price run in commodities might be over.
The rest of the local market was subdued, with the Industrial and Financial indices moving very little after their strong gains of the previous days. The Industrial index, which includes most of the big dual-listed shares, traded only 0.10% higher as European markets were lower on Wednesday, while the Financial index gained only 0.55% as the rand depreciated further to trade at R15.22 to the dollar.
The net result by mid-morning was that the All-share index traded 0.66% higher at 52 219 points and the Top 40 index was 0.54% stronger at 45 953 points.
The mood on the JSE was rather lacklustre, with all indices moving mostly sideways for most of the morning after some initial gains.
At that stage the gold price was 0.47% higher at $1 271.70 per ounce. The yellow metal earlier traded as high as $1 274.65/oz in reaction to news that assets in bullion-backed funds rose to their highest since December 2013, and Goldman Sachs Group raised price forecasts. On Tuesday gold dropped to $1 256.96'oz, the lowest intraday level since April 28.
Bullion is up 20% this year as a slowdown in global growth and the Federal Reserve’s hesitancy to raise interest rates boost its appeal, with investors adding to holdings in exchange-traded funds.
All the major gold shares were higher, with AngloGold Ashanti [JSE:ANG] gaining 5.14% to R224.48 and Harmony [JSE:HAR] 4.59% higher at R49.91. DRDGold [JSE:DRD] traded 4.46% stronger at R8.20 and Sibanye [JSE:SGL] traded 4.45% higher at R52.13.
Oil prices remained firmly above $45 per barrel as fears over the possible effects of Canada's wildfires on output abated. Copper was more than 1% higher and the platinum price gained 1.59% to $1 059.00.
Investors were encouraged by the news that producer prices in China dropped at their slowest rate in 16 months in April, while consumer prices climbed 2.3%, possible signs of a turning point for the world's second-largest economy.
Platinum shares were among the top performers in the resources sector, after sharp losses on Tuesday. Impala Platinum [JSE:IMP], which lost more than 20% of its value over the previous seven days, at mid-morning was 2.77% higher at R48.30, at one stage trading more than 4% up at R48.90.
Anglo American Platinum [JSE:AMS], which lost more than 11% over the previous seven days, gained 2.86% to R372.19 in morning trade. Lonmin [JSE:LON] traded 3.47% higher at R35.44 after shedding more 15% over the previous week.
Kumba Iron Ore [JSE:KIO], which lost 24.41% over the past seven days when the iron price dropped as low as $54 per tonne, also made a strong recovery and gained 5.8% in morning trade to R92.50.
Among the conglomerates BHP Billiton [JSE:BIL] traded 2.33% higher at R182.29 and Glencore [JSE:GLN] was 2.47% up at R29.98. Anglo American [JSE:AGL], the most volatile of the big commodity stocks, traded 3.79% higher at R133.28. Anglo lost 18.9% over the past seven days on the pull back in commodity prices but is still 84.9% higher over the past 90 days.
