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Johannesburg - Resources shares were again a ray of light on the JSE on Thursday, as emerging markets worldwide are struggling to curb an outflow of money back to the US and other developed markets.
By mid-morning on Thursday the major indices on the JSE were again only marginally higher, except for the resources index which was almost 1% up in early trade after gaining more than 10% over the previous seven days.
Emerging markets are following a different pattern to that of the developed world, where the Dow Jones Index reached yet another record on Wall Street on Thursday.
Markets anticipate Donald Trump's administration will increase debt-funded spending to spur growth in the US, which will lead to higher inflation and interest rates. As a result, bond yields in the US are on multi-year highs and the dollar is trading at the highest level in more than 13 years against a basket of currencies.
Investors are reacting to this by diverting money from emerging markets back to the US and other developed markets in search of higher yields, as the risks on these markets are perceived to be lower. MSCI's broadest index of Asia-Pacific shares outside Japan has already lost 3.5% this month.
Commodity prices are however on the rise as the expectation is that Trump will drastically increase spending on infrastructure to boost the American economy. Stronger-than-expected growth in the US manufacturing sector on Wednesday also boosted expectations that US factories might use more commodities. In London, zinc hit an eight-year high and copper jumped for a fourth day in a row as funds poured into metals.
By mid-morning on Thursday the resources index was still 0.79% firmer, which helped pull the All-share and Top 40 indices higher too. The All-share gained 0.15% to 50 694 points, and the Top 40 0.18% to 44 158 points.
The Financial index, which gained more than 3% over the previous seven days, was 0.47% lower at that stage. The Industrial index followed the FTSE Index in London higher as most of the big dual-listed shares on the JSE, which represent more than half of the market’s value, are also listed in London. The index, which shed 0.47%, was also supported by a slightly weaker rand which traded more than 1% softer at R14.23 to the dollar.
Anglo American [JSE:AGL] and BHP Billiton [JSE:BIL], the most well-known commodity shares on the JSE, were both flirting with new 52-week highs on Thursday morning.
By mid-morning Anglo American was 2.63% higher on a new high of R219.00, after the share gained almost 10% over the previous seven days. BHP Billiton in earlier trade was on a new high of R241.00, but then lost ground and at mid-morning was 1.21% stronger at R239.15.
Kumba [JSE:KIO], the country’s biggest iron ore producer, was also at a new 52-week high of R172.96 in early trade. By mid-morning it was 3.03% stronger at R171.55. The share gained 34% over the past month and is a massive 355% higher for the year to date, after it traded as low as R25.35 early in January.
African Rainbow Minerals [JSE:ARI], which gained more than 27% over the past month, at mid-morning was 0.82% higher at R112.00, just below the 52-week high of R112.10. In earlier trade the share was as high as R112.50.
Sappi [JSE:SAP] only traded 0.06% higher but it was enough to reach a new 52-week high of R82.42. Tongaat Hulett [JSE:TON], which closed on a 52-week high of R131.65, was unchanged.
Logistics group Barloworld [JSE:BAW] reached another 52-week high of R104.53 after the share gained 1.73%.
