JSE heavyweights rally on weak rand

Johannesburg - The big dual-listed shares on the JSE, representing most of the market’s value, staged an impressive comeback on Monday morning after languishing in the doldrums over the past month.

By mid-morning the Industrial index was already up on Friday's figure, although it was not enough to pull all the major indices higher. Naspers [JSE:NPN] traded at a new all-time high.

The recovery of the top shares - all regarded as rand hedges as they earn most of their income abroad - is the result of the weaker rand, which fell back sharply against a stronger dollar and traded almost 1% lower at R13.61 to the dollar by mid-morning on Monday.

The dollar lifted off last week’s lows on expectations a signal might emerge from a Federal Reserve gathering this week in Jackson Hole, Wyoming, that the US central bank is gearing up to hike interest rates. Central bankers around the world are to attend an annual gathering at the mountain retreat, and all eyes will be on a speech Federal Reserve chairperson Janet Yellen will deliver on Friday.

The weaker rand and stronger dollar however did not benefit all sectors on the JSE. The softer rand pulled the Financial index 0.35% lower, while the strong dollar is also not good news for resources and gold shares, which traded 2.37% and 3.93% lower respectively.

The All-share index was therefore 0.02% lower at 52 761 points, while the Top 40 index was at that stage 0.18% stronger at 45 961 points.

The markets are hoping for some indication from the Fed after more hawkish comments by officials. On Sunday, Fed vice-chairperson Stanley Fischer gave a generally upbeat assessment of the US economy's current strength, saying the job market was close to full strength and still improving.

"Fischer's comments have raised some expectations in the market, particularly after recent comments from William Dudley, president of the New York Fed," said Ayako Sera, market strategist at Sumitomo Mitsui Trust Bank. Dudley said a rate hike would be possible in September.

The top five shares on the JSE, which represent 50% of the market value, all made impressive gains. Most of them lost more than 10% over the past month before the recovery started.

British American Tobacco [JSE:BTI] was the biggest gainer, improving 2.79% to R887.50. SABMiller [JSE:SAB] lifted 2% to R781.39 and Anheuser-Busch InBev [JSE:ANB] was 0.95% stronger at R1 719.74. Before Monday’s trade, the two beer giants were 2.13% and 2.87% higher over the past seven days respectively.

Naspers is the one of the big five not so much affected by the stronger rand of late, and it gained 6.44% over the past seven days and 8.26% over the past 30 days. The share gained 1.21% on Monday to trade at a new all-time high of R2 316.59.

Richemont [JSE:CFR] gained 1.50% to R54.68 and before Monday’s trade was 3.42% higher over the past seven days.

European markets were also moderately higher on Monday after last week’s losses, but the big mining shares also listed in London were lower. Anglo American [JSE:AGL] shed 3.20% to R148.00 and Glencore [JSE:GLN] fell 2.85% to R32.41. BHP Billiton [JSE:BIL] was also 1.17% softer at R182.52.

DRDGold [JSE:DRD] was the biggest loser in the gold sector, shedding 16.26% to R9.01. Sibanye [JSE:SGL] was the busiest share on the JSE in terms of volume, and traded 4.80% lowerat R64.02. The gold price lost 0.58% to $1 333.30.