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JSE nudges up as rally loses momentum

Johannesburg - Emerging markets, including the JSE, nudged higher on Thursday morning with the easing of US Treasury yields as a week-long surge that followed Donald Trump's shock election win subsided further. It also dragged the dollar off a 13-and-a-half year peak set overnight.

At mid-morning the major indices on the JSE were however modestly higher, after a strong surge the previous day.

The All-share index was at that stage 0.79% higher at 50 400 points, while the Top 40 index gained 0.77% to 43 927 points.

Resources shares were the biggest winners, with the Resources 10 index gaining 1.24% and the volatile Gold index trading 2.71% higher. The Industrial index was 0.61% up and the Financial index gained 0.82%, although European markets took a breather after strong gains the previous days.

The dollar has soared since Trump was elected president last week, as investors eyed the prospect of US interest rates rising faster than previously expected due to his plans for an expansionary fiscal policy that would stoke inflation.

But the rout in US bond prices began to slow, with the benchmark 10-year note yield pulling back to 2.197% in Asian trade after touching an 11-month high above 2.3% earlier in the week.

"The price action in fixed income suggests that the market has moved sufficiently for the time being, which raises the possibility that the dollar's rise may be due for a period of consolidation," Sharon Zollner, senior economist at ANZ, wrote in a research note.

The big mover on Wednesday, Naspers [JSE:NPN], fell victim to some profit-taking after strong gains the previous day. The share price was at one stage almost 5% stronger and ended the day 2.93% firmer.

By mid-morning the stock was 1.17% lower at R1 205.10. Before Thursday’s trade the share price was still 8.5% softer for the previous 30 days, in line with the performance of other emerging markets.

Naspers’ gain the previous day was the result of Chinese internet giant Tencent's faster than anticipated 52% revenue rise to 40.4 billion yuan ($5.9bn) for the third quarter. The strong profit growth was fuelled by a 66% increase in spending on new businesses. Naspers owns a 34% stake in Tencent.

Anheuser-Busch InBev [JSE:ANH] made a turnaround on Thursday morning after losing more than 20% over the previous three months. The biggest company on the JSE traded 0.90% higher at R1 475.15.

Investment company Brait [JSE:BAT]  traded 0.12% firmer at R90.62 after it reported a first-half loss. The South African owner of health club chain Virgin Active and clothing retailer New Look said the pound’s weakness against the rand cut into the net asset value of the UK units it bought last year. The company posted a R4.5bn loss for the six months to end-September, compared with a profit of R18.1bn a year earlier.

Most of the bad news is already discounted in the share price, which is 15.5% lower over the previous 30 days and 43.9% softer for the year to date.

Another investment holding company, Reinet [JSE:REI], has grown net asset value by a healthy 5.7% to €5.5bn in the six months between April 30 and September 30 2016. The share traded 0.99% higher at R27.43 after losing 16.46% of its value over the previous 90 days.

Sasol [JSE:SOL] gained 1.40% to R363.00, although oil prices eased as a bigger-than-expected US crude inventory build outweighed hopes for a freeze on output following Russia's comments about a possible meeting with Saudi Arabia. Brent crude was down 0.2% at $46.55 a barrel.

BHP Billiton [JSE:BIL] traded 0.65% higher at R226.00 and Anglo American [JSE:AGL] was also moderately firmer, gaining 0.72% to R170.70. Anglo American said on Wednesday it suspended all operations at its Los Bronces copper mine in central Chile, after protesters seized installations at the mine earlier in the day.

Kumba [JSE:KIO] was 6.72% higher at R170.17 and Impala Platinum [JSE:IMP] 5.77% stronger at R170.17.

DRDGold [JSE:DRD] was the best performer among gold shares, gaining 8.17% to R6.49. The share price lost 49.9% over the past 90 days but is still 116.6% higher for the year to date.

Gold nudged up slightly as the dollar consolidated. Spot gold was 0.1% higher at  $1 226.10 per ounce, moving further away from the five-month low of $1 211.08 set on Monday. The metal lost about $100/oz from last Wednesday's post-US election high, on the back of the sharp rise in bond yields.

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Rand - Dollar
18.94
-0.2%
Rand - Pound
23.91
-0.1%
Rand - Euro
20.43
+0.2%
Rand - Aus dollar
12.34
+0.1%
Rand - Yen
0.13
-0.2%
Platinum
910.50
+1.5%
Palladium
1,011.50
+1.0%
Gold
2,221.35
+1.2%
Silver
24.87
+0.9%
Brent Crude
86.09
-0.2%
Top 40
68,346
+1.0%
All Share
74,536
+0.8%
Resource 10
57,251
+2.8%
Industrial 25
103,936
+0.6%
Financial 15
16,502
-0.1%
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