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Johannesburg - Stability
seems to have returned to the JSE, despite some continued turmoil on
international markets.
With the rand fairly stable, all major indices on the
JSE were modestly higher by mid-morning except for the Gold index, which traded
1.64% lower as investors took profits after gains of more than 26% over the
previous 30 days.
Even the big dual-listed shares, most of which are also
listed on the London Stock Exchange, were slightly higher despite some pressure
on the London market.
The London Stock Exchange is very similar to the JSE, with
the majority of big shares earning most of their income abroad. These shares
have been hammered over the last two days by a stronger pound.
The rise in the pound appears to be driven by expectations
that support for British Premier Theresa May will increase in an upcoming
election. This will mean that she will no longer be held hostage by
hard-Brexiteers in her party, and as such will have a better chance of avoiding
a hard Brexit which some fear would hit the economy.
The rand weakened more than 2% against the pound, which
makes local listings of the big dual-listed shares cheaper.
The currency traded at R13.36 to the dollar, slightly weaker than the previous day’s close of R13.29, giving modest support to resources shares which were also higher in Europe. By mid-morning the Resources index was 0.27% higher.
The rand is still supported by a weak dollar, which is undermined by an eroding interest rate advantage as US bond yields dived to five-month lows. Yields on the 10-year Treasury paper sank to 2.17%, compared to a 2.629% peak seen in March. US bond yields are driven down by investors buying bonds as a safe haven, on concerns about the political situation in Syria and North Korera and the upcoming French presidential election.
As a result the All-share index was 0.32% higher at mid-morning at 52 840 points, while the Top 40 index, which includes most of the big dual-listed shares, traded 0.33% stronger at 46 024 points.
Local shares normally follow the lead of their overseas counterparts, but on Wednesday the Industrial index at mid-morning was still 0.20% higher after gaining almost 0.5% in early trade.
The Financial index continued its recovery and was 0.60% higher by mid-morning. Insurance shares were particularly strong,
with Sanlam [JSE:SLM] the busiest share on the market. Almost 4 million
shares were traded for more than R275m. The stock, which strengthened
almost 7% over the previous seven days, traded 1.60% higher at R69.70.
Among the other insurers, Old Mutual [JSE:OML] gained
1.45% to R32.89 while MMI Holdings [JSE:MMI] was 0.49% higher at R22.71.
FirstRand [JSE:FSR] in the banking sector was 1.40% higher
at R47.90, but Nedbank [JSE:NED] lost 1.23% to R221.80. FirstRand recovered
strongly over the past few days and is more than 5% higher than seven days ago,
but Nedbank is still 0.55% lower over the same period.
Naspers [JSE:NPN] traded 0.60% higher at R2 449.70 in
the industrial sector and Richemont [JSE:CFR] was a modest 0.12% stronger at
R106.00. British American Tobacco [JSE:BTI] was however 0.34% softer at R892.51
and Steinhoff [JSE:SHF] lost 0.86% to R65.90.
Kumba [JSE:KIO], which was one of the big losers in the
resources sector on Tuesday in response to the rand’s strong improvement over
the Easter weekend, made a correspondingly firm recovery on Wednesday. At
mid-morning the share was 5.73% higher at R179.95.
Anglo American [JSE:AGL] was 0.70% stronger at R191.92 in brisk trade, and BHP Billiton [JSE:BIL] lifted 0.34% to R205.60. Sasol [JSE:SOL] gained 0.89% to R406.10.
