Johannesburg - The two biggest shares in the Industrial index of the JSE, British American Tobacco (BAT) [JSE:BTI] and SABMiller [JSE:SAB], both reached new highs on Tuesday morning, which helped to pull the rest of the market higher.
By midday on Tuesday the Industrial index, one of the few major indices that delivered a positive return last year, was almost 1% stronger (0.81%), enough to pull the rest of the market higher despite a big selloff in commodity shares.
At that stage the All-share index was 0.28% higher at 48 457 points, while the Top 40 index gained 0.30% to 43 611 points. The Financial index also stabilised somewhat while the Financial 15 index was also 0.55% up and the rand steadied at R16.62 to the dollar.
The Resources index was however 2.42% lower as investors were concerned about further decreases in commodity prices, including the oil price which is now approaching $30 a barrel. Oil has now lost almost 20% in two weeks as investors remain wary of the oversupply and a lack of demand from China in particular.
The markets in the developed world have stabilised after the rout of the previous few days, with all major markets in Europe up after Wall Street also closed higher on Monday evening.
These gains supported the big dual-listed shares on the JSE which are favoured by foreign investors.
SABMiller started the trading day in a strong position and shortly after the opening was more than 1% higher at R991.37. By midday the frenzy had cooled off somewhat, but the share was still 0.37% higher on a new high of R982.37. The stock has gained 58.4% over the past 90 days since the takeover of SABMiller by Anheuser-Busch InBev was announced.
BAT made more steady progress and gained only 26.4% over the past 90 days. The share price set a new record of R889.37 on Tuesday, 0.54% is higher than the previous day’s close.
Among the other heavyweights Naspers [JSE:NPN] gained 1.22% to R1 994.32 and Richemont [JSE:CFR] was 1.35% stronger at R110.25. Naspers lost almost 10% in last week’s selloff on concerns about its exposure to China, while Richemont gave up 2.5%.
Concern about the state of the Chinese economy persists and Asian stocks are now near four-year lows.
MSCI's broadest index of Asia-Pacific shares outside Japan gave up early gains to trade 0.2% lower, just shy of its lowest level in four years. It is down more than 8% since the start of 2016, having fallen 12% last year.
“Investors are still concerned about the extent of China's slowdown and while we may be in the middle of a consolidation phase, we have yet to see any data indicating a turnaround which is feeding the overall uncertainty," said Ben Pedley, head of investment strategy for Asia at HSBC Private Bank in Hong Kong.
The uncertainty about China is also reflected in commodity prices and Brent crude traded at only $31.24 on Tuesday morning, the lowest level in 12 years. Copper fell to the lowest in six-and-a-half years and platinum and palladium were both lower on Tuesday.
In contrast with the dual-listed shares in the industrial sector which all traded higher, their commodity conterparts all dropped sharply.
These shares traded down in London, where the FTSE 350 Mining index is now at the lowest level since 2004. The biggest commodity share on the JSE, BHP Billiton [JSE:BIL], reached a new 52-week low when it lost 5.63% to R151.46. This share held up longer than most of the big commodity shares, but has now lost 27.8% over the past 90 days.
Glencore [JSE:GLN] traded 5.63% lower at R17.92 after it was at one stage more than 8% softer. The share lost 59.7% of its value over the past year.
Anglo American [JSE:AGL], which lost more than 70% over the past year, opened sharply lower but later recovered. By midday it was only 1.94% softer at R57.61 after it reached a new 52-week low of R54.82 earlier.
FirstRand [JSE:FSR] was the best performer among the financial shares and gained 5.18% to R39.97. Standard Bank [JSE:SBK] opened lower than R100 per share but recovered and was 1.50% higher at midday at R101.50. Old Mutual [JSE:OML] was 1.39% stronger at R38.72.