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JSE ends three-day losing streak on resources rally

Johannesburg - The big commodity stocks on the JSE traded close to record levels on Thursday as unexpected good news about the US and Chinese economies gave the recent commodities rally another push.

At mid-morning Glencore [JSE:GLN] and Anglo American [JSE:AGL] were already trading at new 52-week highs, while BHP [JSE:BIL] was just below its 52-week high, with the Resources index already 1% higher.

The rally in major resources stocks helped end a three-day losing streak on the JSE, with the Industrial and Financial indices also marginally higher. The Industrial index gained 0.10% and the Financial index 0.31%.

As a result, the All-share index at mid-morning was 0.33% higher at 56 354 points, while the Top 40 index was 0.35% stronger at 49 850 points.

Investors are still nervous about the standoff between the US and North Korea, but risk appetite was whetted by upbeat Chinese and US economic news.

After the news on Wednesday that the world's largest economy expanded a forecast-beating 3% in the second quarter, a survey on Thursday showed Chinese factory growth unexpectedly accelerated in August, confounding forecasts for a slight slowdown. The official purchasing managers' index firmed to 51.7, from 51.4 in July.

That gave a fresh boost to industrial metals, with copper nearing its highest level since late 2014 and on track for 7% gains in August.

At mid-morning Glencore, the world’s largest producer and trader in copper, was already 2.75% higher on a new 52-week high of R61.56; the stock is now more than 10% higher over the past month.

Anglo American, which gained more than 19.6% over the previous 30 days, reached a new 52-week high of R235.68 - 2.87% higher than Wednesday’s close. BHP was at that stage 1.46% higher at R248.93, just below the 52-week high of R249.42.

Kumba Iron Ore [JSE:KIO] was already 4.88% higher at mid-morning at R217.17, after gaining 17.65% over the previous 30 days. Iron ore has surged since mid-June as reforms in China have helped sustain demand for steel at the same time as officials are tightening up on pollution curbs and weeding out illegal plants before a Communist Party congress this fall.

Kumba is producing top quality ore which is in high demand at steel mills, and the price of some of the top grades has already exceeded $100 per ton.

The relatively strong rand is still putting a cap on these shares. It traded at R13.03 to the dollar on Thursday morning, after closing at R12.96 the day before. The local unit is however much stronger than the R13.45 level of two weeks ago.

The dollar has lately been under pressure due to political uncertainty in the United States and US President Donald Trump’s threats to North Korea, but recovered somewhat on the better economic news.

Naspers [JSE:NPN] is still battling to get back to the level of R3 000 it breached last week. At mid-morning it was 0.5% softer at R2 924.90, despite a 0.73% gain in the share price of Tencent on the Hong Kong Stock Exchange. Naspers owns 4% of Tencent, and this stake represents most of its income and value.

Steinhoff’s [JSE:SHF] woes continued and the share traded 1.32% softer at R62.05. It lost more than 6% over the past week after an article in a German magazine accused management of malpractices, which Steinhoff denied.

Shoprite [JSE:SHP] is however going from strength to strength, firming 0.94% to yet another 52-week high of R224.29. Shoprite gained almost 10% over the past 90 days.

Woolworths [JSE:WHL], which lost more than 11% over the previous seven days after it announced the first profit fall in eight years last week, traded 0.17% softer at R59.14.

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Rand - Dollar
19.03
-0.7%
Rand - Pound
24.01
-0.5%
Rand - Euro
20.54
-0.3%
Rand - Aus dollar
12.36
-0.0%
Rand - Yen
0.13
-0.6%
Platinum
900.50
+0.4%
Palladium
1,002.25
+0.1%
Gold
2,209.77
+0.7%
Silver
24.53
-0.5%
Brent Crude
86.09
-0.2%
Top 40
68,080
+0.6%
All Share
74,278
+0.5%
Resource 10
56,967
+2.4%
Industrial 25
103,572
+0.3%
Financial 15
16,456
-0.4%
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