Johannesburg - The JSE continued on its strong recovery path on Friday with the All-share index again above 52 000 points, after trading as low 46 282 points as recently as January 20.
Although financial shares took a breather on Friday after the strong run of recent times, the commodity index continued with its strong recovery on the back of increased confidence in global growth prospects, which could lead to an increase in demand for commodities and a lower dollar. Commodity shares are also considered to be undervalued.
By mid-morning on Friday the All-share index was already more than 11% higher than the low reached in January, and is now about 1.6% higher for the year to date. The index last year closed at 49 228 points.
The mood on the JSE is supported by world markets, and by mid-morning Asian shares looked set to post their strongest week in five months as global investors returned to riskier assets after a string of positive US economic data and a bounce in oil and commodity prices. The MSCI World equity index, covering 46 markets, held near its two-month high touched on Thursday.
Analysts said the rebound could continue if the February US employment report later in the session shows job gains but remains weak enough to discourage Federal Reserve rate increases in the near term.
At mid-morning the All-share index was 0.48% higher at 52 036 points and the Top 40 index traded 0.28% stronger. This was mainly due to resources as the Resources 10 index traded 2.09% higher and the Gold index was 3.61% up. The Financial index was however 0.30% softer and the Industrial index only moved 0.09% in the black.
Platinum shares are among the strong movers lately and Friday morning was no exception. These shares are supported by the platinum price, which gained 15% over the past 30 days and traded another 1.07% higher at $943.00 per ounce.
Anglo American Platinum [JSE:AMS], which gained 90.5% over the past 30 days before Friday, at mid-morning was 5.35% higher at R384.54. Impala Platinum [JSE:IMP] was 4.64% higher at R46.04; before Friday’s trade it was 68.5% stronger over the past 30 days.
The smaller producers also recovered and Lonmin [JSE:LON] gained 11.34% to R30.83, after trading as low as R8.70 as recently as January 20 this year. The share price increased by 166.31% over the past 30 days before Friday’s trade. Royal Bafokeng [JSE:RBP] was 8.12% higher at R41 and is now more than 70% higher than a month ago.
The commodity conglomerates also gained on the back of higher base metal prices. Copper prices hit their highest in more than three months on Thursday. BHP Billiton [JSE:BIL] traded 3.06% higher at R182.18 despite the news that Moody’s Investors Service cut its debt rating to “A3” from “A1”, citing a deterioration in the company’s earnings and cash flow.
BHP started its recovery later than the other commodity shares but gained a solid 18.7% over the past seven days. Anglo American [JSE:AGL] was 3.3% higher at R123.30 after it traded at a 52-week low of only R53.30 as recently as six weeks ago.
The remarkable recovery in Kumba's [JSE:KIO] share price continued and the share gained another 6.12% to R81.50 after it traded at only R23.30 in the middle of January. Before Friday’s trade the share gained 153% over the past 30 days.
Coal miner Exxaro Resources [JSE:EXX], which is considering buying assets from Anglo American, gained 2.59% to R74.93. The diversified mining company, which mainly produces coal and invests in iron ore, posted a two-thirds drop in full-year profit due to a sharp fall in commodity prices, and reported a sharply lower dividend.
Exxaro's CEO Mxolisi Mgojo told reporters and analysts he would consider buying assets from Anglo, which has said it plans to sell its iron ore, coal and nickel units in a sweeping strategic overhaul to cope with a commodities rout. Exxaro is now 57% higher than three months ago.
FirstRand [JSE:FSR] gained 1.75% in the banking sector to trade at R48.84 but Barclays Africa Group [JSE:BGA] was 0.04% softer at R141.95.
MTN [JSE:MTN], which made its biggest daily gain in seven years on Thursday, was far more subdued on Friday and traded 2.06% higher at R144.55.