Johannesburg - New concerns about the US economy, which sparked speculation that US interest rates may not rise again this year, brought the dollar to its knees.
The oil price rallied in response to the weaker dollar and global markets were mostly higher on Thursday.
The softer dollar, which traded on Thursday at the lowest level against the euro in fourteen weeks, was particularly good news for resources shares worldwide and the JSE was no exception with some resources shares spectacularly higher.
Some of the oversold resources shares, which lost more than half of their value on the back of poor commodity prices, continued their strong recoveries of the past few days with gains of more than 10%.
By midday the All Share-index was already 2.15% higher and the Top 40-index traded 2% stronger on 44 326 points. These gains were made possible by a jump of 6.51% in the Resources index and 8.65% in the Gold index. The Financial index was also 2.59% higher as the rand traded again below R16.00 to the dollar and the Industrial index was 1.01% stronger.
The dollar fell sharply on Wednesday after weak US data and comments from a Fed policymaker were interpreted as signalling further rate hikes could be delayed.
The dollar's slide picked up speed after the MNI news agency published an interview with New York Fed chief William Dudley, who sounded more cautious about the turmoil in the global financial markets. He also said that a strengthening dollar could have "significant consequences" for the US economy.
"We're acknowledging that things have happened in financial markets and in the flow of the economic data that may be in the process of altering the outlook for growth and the risk to the outlook for growth going forward," he said.
The market was also concerned about the news that ISM's US services sector purchasing managers index for January dropped more than expected, pointing to sluggish growth in the largest part of the US economy.
The weaker dollar and unconfirmed talk that oil-producing countries in and outside the Opec group may meet soon to discuss output cuts, gave crude prices a strong boost and Brent, the global benchmark, traded at more than $35 per barrel, having fallen as low as $27.10 in mid-January.
Asian markets, with the exception of the Japan which did not like the idea of a stronger yen against a strong dollar, as well as the top European markets, were all stronger on Monday.
African Rainbow Minerals [JSE:ARI], a local conglomerate with a variety of interests, including iron ore and manganese, was the star performer among the recovering resources shares. The share, which gained 53.2% over the previous thirty days, added another 22.75% on Thursday to R70.99. However before today’s strong gain the share was still 54.7% lower than a year ago.
Anglo American [JSE:AGL] also gained 11.73% on Thursday morning to R70.70 and Glencore [JSE:GLN] was 6.51% higher on R21.44.
Platinum shares were the big gainers on Thursday with Impala Platinum (Implats) [JSE:IMP] more than 18% and Anglo American Platinum (Amplats) [JSE:AMS] more than 17% higher. Implats, which gained more than 20% over the previous days, added another 18.22% to R37.38. The share was before today’s trade still 60.78% lower than a year ago.
Amplats traded 17.09% stronger on R270 at midday after gaining 31.8% over the previous thirty days. The loss for the past year is now 40.98%.
Kumba Iron Ore [JSE:KIO], which gained a massive 34.6% over the previous seven days, also continued its recovery with another gain of 11.61% to R48.91. There is however still a lot of upward potential as the losses for the past year was before today’s trading still 81.2%.
READ: Kumba Iron Ore sees 2015 profit plunging
Exxaro [JSE:EXX], with exposure to iron ore through Kumba and extensive coal interests, have gained 19.2% over the past seven days and 38.9% over the past 30 days. The share traded another 13.27% stronger on R68.76.
The steel producer ArcelorMittal [JSE:ACL], which traded as recently as 17 December on a 52-week low of only R2.90, reached a high of R8.00 in intraday trade on Thursday.
The share, which was this morning 104.12% higher than seven days ago, traded at midday another 11.73% higher on R7.50. The share price was however before today’s trade still 73.6% lower than the 52-week high of R26.39 reached in February last year.
Among shares with direct exposure to the oil price BHP Billiton [JSE:BIL] traded 7.93% higher on R162.43 and Sasol [JSE:SOL] gained 5.83% to R422.38.
Some of the top gold shares reached new 52-week highs on Thursday. Harmony [JSE:HAR] gained another 13.61% to a new high R37.33 after it traded as recently as November last year at a 52-week low of only R13.61. That means that before today’s trade the share gained 225% over the past ninety days.
Anglogold [JSE:ANG], which was on a 52-week low of R73.76 in August last year, traded up 7.62% at a new high of R157.28, which is a jump of more than 100% in only six months.
DRD Gold [JSE:DRD] was 4.81% higher on a new high of R5.45 and Sibanye [JSE:SGL] gained 8.01% to reach a new high of R40.72.
Bidvest [JSE:BVT] reached a new high in the industrial sector when it gained 1.01% to reach R366.99.