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Johannesburg - Friday’s rally on the local financial markets continued on Monday morning, but the gains were very modest and share prices were losing momentum by mid-morning. The rand however continued its strong recovery and that is perhaps why the stock market was losing steam, particularly the prices of rand hedge shares.
The rand, stocks and bonds all rallied on Friday, with investor confidence lifted by National Treasury’s successful issuing of a foreign dollar bond in the face of political upheaval and the prospect of looming rating downgrades. The rand immediately gained more than 2% on Friday to R14.95 to the dollar.
By Monday mid-morning the JSE’s major indices were only marginally higher. The All-share index was 0.07% up at 51 548 points, but at one stage it was about 0.4% stronger at 51 639 points. The Top 40 index gained 0.03% to 45 239 points.
The Financial index was 0.05% higher and the Industrial index, which consists mainly of dual-listed rand hedge shares, lost 0.37%.
The Treasury said its $1.25bn 10-year bond, with a coupon of 4.875%, was oversubscribed more than twice, mostly by investors based in Europe and the United States.
Analysts said the successful placing of the 10-year bond had a positive impact on sentiment towards South Africa, showing investors are not running to the hills yet.
The JSE was also influenced by world markets which are still struggling for direction. Renewed strength in the yen, government bonds and gold pointed to heightened caution among investors, although European markets rebounded somewhat later in the day.
European stocks have fallen for the last four weeks, and another down week would mark their worst run in almost three years.
The Gold index, which has gained 132% over the past 90 days, was again the strongest performer with gold trading almost 1% higher at $1 248 per fine ounce. By mid-morning the Gold index was 4.98% stronger.
Top gold shares, like AngloGold Ashanti [JSE:ANG] and DRDGold [JSE:DRD], traded at new 52-week highs. AngloGold was 6.5% higher at mid-morning at a new high of R228.60, and has now gained 135.4% over the past 90 days. DRDGold, which gained 160.8% over the past 90 days, traded 3.35% higher on Monday at a new high of R6.47.
Sibanye [JSE:SGL] was 3.20% stronger at R57.05 on news that the mining group reached a wage deal with union Amcu at its gold mines, which led to the suspension of Amcu’s planned strike. Sibanye is a massive 190.9% higher over the past 90 days.
BHP Billiton [JSE:BIL] was only 0.59% higher at R160.94, but Anglo American [JSE:AGL] traded 4.41% up at R119.36. At one stage the share price was more than 6% higher at R121.25.
Santam [JSE:SNT] was initially the star performer in the financial sector and reached a new 52-week intraday high of R242.54, beating the current high of R241.32. The share price later lost momentum and at mid-morning traded 0.86% higher at R237.20.
Santam is now 18.7% higher than 90 days ago. Analysts said the stronger rand will reduce the insurer's repair costs as imported parts will be cheaper.
FirstRand [JSE:FSR] lost 0.20% to R45.15 but Standard Bank [JSE:SBK] gained 1.02% to R124.07.
MTN [JSE:MTN] lost 1.31% to R127.88 and is now almost 5% weaker over the past seven days. Vodacom [JSE:VOD] however set yet another intraday 52-week high, before losing momentum in later trade. The share traded as high as R161.30 but by mid-morning was only 0.73% higher at R160.85, just below the current high of R160.90.
Pick n Pay [JSE:PIK] also flirted with a 52-week high when it reached R72.28. By mid-morning the share price was 0.97% higher at R71.62, just below the high of R71.79. Pick n Pay had good run lately and is now 26.8% stronger over the past 30 days. Woolworths [JSE:WHL] was 0.78% softer at R85.13.
