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Johannesburg - The JSE rallied in line with global stocks on Monday morning, after inflation data in the US added to evidence that global growth is continuing steadily with limited price pressures in the American economy.
By mid-morning the major indices were back at record levels.
Metal prices in particular rallied on the positive outlook for global growth, with iron ore and palladium prices reaching new heights, boosting resources shares on the JSE.
The Industrial index, which includes many dual-listed shares, was also higher after Asian markets climbed on Monday with a gauge of Asian stocks trading at the highest level in since 2007. Naspers [JSE:NPN] was again on an all-time high.
Friday’s inflation date data bolstered the view that US inflation below the Federal Reserve’s target may be structural rather than transitory, prompting traders to slightly reduce the odds of another interest rate hike in December.
Dual-listed shares were also supported by the rand, which retreated against the dollar early on Monday after scaling a three-week high on Friday. The local unit traded at R13.31 to the greenback at mid-morning, after reaching R13.25/$ on Friday after the Supreme Court of Appeal upheld a ruling by a lower court to reinstate corruption charges against President Jacob Zuma.
Analysts said the rand, which traded as low as R13.86/$ a week ago, has appreciated way too fast.
As a result, the All-share index was on a new all-time high time at mid-morning after it gained 0.73% to 58 300 points in early trade. The Top 40 index was also solidly above the previous all-time high, after it added 0.77% to 51 846 points. The Industrial lifted gained 0.61% to reach a new all-time high.
The star performer was the Resources index, which was 1.66% higher at 36 542 points, about 300 points lower than the 52-week high set earlier this month. The Gold index was 2.54% higher with the gold price back above $1 300 per ounce, after it gained 0.79% to $1 304.33.
The three biggest commodity conglomerates listed on the JSE were all on new 52-week highs. BHP [JSE:BIL] gained 2.25% to reach a new high of R253.08 and Glencore [JSE:GLN] was 1.69% higher at R67.93.
Anglo American [JSE:AGL] traded 1.92% higher at R266.08, supported by the continuing run in the share price of its affiliate Kumba Iron Resources [JSE:KIO]. Kumba’s share price, which closed more than 7.6% higher on Friday, was 4.82% higher on a new 52-week high of R266.15. Exxaro [JSE:EXX], which owns 20% of Kumba, gained 2.73% to a new 52-week high of R147.13.
Kumba rallied on news that iron ore imports by China surged above 100 million metric tons in September to a record, smashing the previous high set in 2015. Analysts said that steel producers in China, which are compelled to clean up the environment, are forced to buy higher grade iron ore from overseas and dump lower graded local mining supply. Kumba is producing some of the best quality ore in the world.
Palladium climbed above $1 000 an ounce for the first time since 2001 amid growing demand for the metal in pollution-control devices for gasoline-powered vehicles. The metal is one of this year’s best performing commodities, advancing 48%, more than three times the increase in gold and about ten times the gain in its sister metal platinum.
The major platinum groups, which all produce palladium as well, also traded higher. Anglo American Platinum [JSE:AMS] added 1.54% to R367.05. Lonmin [JSE:LON] was 1.62% higher and Impala Platinum [IMP] gained 0.88% to R32.00.
Naspers, by far the biggest share in the Industrial index, was 1.44% higher on a new all-time high of R3 246.12. The share was as high as R3 299 in earlier trade after its Chinese subsidiary, the internet giant Tencent, gained 1.83% in Hong Kong to reach a new high of HK$ 355.60. Tencent represents the biggest part of Naspers’s income and market value.
