Johannesburg - Even the darkest cloud has a silver lining, and that seems to be the attitude on world markets on Tuesday, including the JSE.
News about slow growth in China sparked expectations that more monetary easing measures were imminent. It was also not totally unexpected and had been discounted a great deal. World markets rallied and the JSE followed suit, with all major indices more than 1% higher by midday.
The rand firmed to R16.5960 per dollar as emerging market currencies strengthened around the world, while government bonds also rallied.
Expectations of an economic stimulus improved sentiment in China’s stock markets, which gained the most in two months, while European markets also opened considerably stronger.
By midday the All-share index on the JSE was 1.41% stronger at 47 356 points and the Top 40 index had gained 1.61% to 42 773 points. The stronger rand supported the Financial index which traded 1.25% higher, while the Industrial index gained 1.33% as it followed European markets higher.
The biggest gains were made by the resources sector, which would benefit most from measures to kickstart the Chinese economy, and the index rose 2.95%.
Gold lost some its safe haven status and the Gold index traded 3.24% softer.
The Chinese government announced that gross domestic product rose 6.8% in the fourth quarter from a year earlier. Full-year growth of 6.9%, the lowest since 1990, was slightly less than the government’s target of about 7%.
READ: Chinese economy caps its weakest quarter since 2009
Industrial production posted one of the weakest gains in the past quarter century, increasing 5.9% in December from a year earlier. That compared with a 6% median estimate of analysts and November’s 6.2%.
“It’s not terrible numbers really when you think about it. There’s a little bit of optimism that maybe the negativity around the Chinese growth was a bit overdone,” said Bidvest Bank chief dealer Ion de Vleeschauwer.
“So we’re seeing commodity currencies rally across the board this morning.”
The Chinese stock market, which fell into a bear market on Friday, jumped the most in two months and industrial shares rallied on prospects of state-fund buying and more economic stimulus. The Shanghai Composite Index rose more than 3.2%. Major European markets were almost 2% higher, while Wall Street was closed for a holiday on Monday.
One of the big winners in the resources sector was Kumba Iron Ore [JSE:KIO], which gained a massive 12.01% to R28.45. Some analysts think Kumba might be the turnaround share of the year, as the downward potential is very limited for a stock which traded at more than R600 three years ago. Assore [JSE:ASR], the other big iron producer, gained 5.92% to R69.38.
Among the commodity conglomerates, Glencore [JSE:GLN] rose 9.03% to R19.31 and Anglo American [JSE:AGL] was 8.36% higher at R60.13. Anglo American Platinum [JSE:AMS] gained 6% to trade at R189.86.
In financial shares Old Mutual [JSE:OML] traded 2.65% higher at R37.62, but Sanlam [JSE:SLM] gained only 0.95% to R53.92.
FirstRand [JSE:FSR] was 1.08% higher at R39.42 and Standard Bank [JSE:SBK] gained 0.69% to R100.34. Barclays Africa Group [JSE:BGA] was barely in the black and rose only 0.14% to R128.88.
The big dual-listed shares in the industrial sector with listings in London were all stronger. Naspers [JSE:NPN], one of the shares with the biggest exposure to the Chinese economy, was a top performer with a gain of 3.9% to R1 882.64.
Richemont [JSE:CFR], which also earns a big part of its income in the Far East, was one of the busiest shares but traded only 0.10% stronger at R105.30.
British American Tobacco [JSE:BTI] traded 0.40% stronger at R867.35 and another Rupert company, Reinet [JSE:REI], reached a new 52-week high of R32.32, 1.32% higher than the previous day. Reinet gained 27.5% over the past year.
SABMiller [JSE:SAB] reached yet another 52-week high, although it was only 0.10% higher at R983.67. Anheuser-Busch Inbev [JSE:ANB] was 2.46% stronger at R1 992.00.