Resources rise but rest of JSE in doldrums

Johannesburg - Resources shares were the stars on the JSE on Tuesday morning, after the dollar lost momentum as investors awaited guidance on whether the Federal Reserve will raise US interest rates this year.

The local resources sector took its lead from the London market, where the major commodity producers traded higher as the softer dollar supported metal prices.

By mid-morning on Tuesday the Resources index was already 1.34% stronger, enough to pull the major indices marginally higher. The rest of the market was still in limbo, including the industrial sector as the big dual-listed shares took a breather after Monday’s strong run.

At that stage the All-share index was only 0.26% higher at 52 965 points and the Top 40 index traded 0.38% firmer at 46 198 points. The Industrial index was only 0.17% stronger and the Financial index had lost 0.17%. The Gold index remained under pressure against a relatively strong dollar and at mid-morning was 0.99 % softer. The index is already almost 10% down over the previous seven days.

The market is expected to remain flat until Friday when Federal Reserve chair Janet Yellen will speak at the bank’s annual meeting in Jackson Hole in Wyoming, which will also be attended by central bankers from around the world. Markets are waiting for guidance from her on when the Fed plans to raise US interest rates.

The All-share index has traded in a band of between 52 000 and 53 000 points since the beginning of August.

BHP Billiton [JSE:BIL] was the busiest among the big resources shares and gained 3.27% to R189.80. Glencore [JSE:GLN] lifted 2.76% to R33.53 and Anglo American [JSE:AGL] was 3.74% higher at R153.86. Anglo performed the best over the past seven days, gaining 5.86% before Tuesday’s trade, while BHP Billiton was only 1.64% up over the same period. Glencore lost 4.23% during the same timeframe.

Platinum shares were however sharply lower as Impala Platinum [JSE:IMP], the world’s second-largest miner of the metal, warned full-year earnings would tumble as much as 75% because of lower local prices and production stoppages. Headline earnings are expected to be between 9 cents to 16c a share for the year ended June 30, compared with 36c a year earlier.

Impala’s share price lost 3.75% to R59.49 and Anglo American Platinum (Amplats) [JSE:AMS] lost 3.60% to R400.06. Before Tuesday's trade both shares were already sharply lower over the past seven days on the back of a softer platinum price. Amplats lost 11.7% over that period and Impala 8.18%. As recently as Augus, Amplats traded at a 52-week high of R475.00.

Impala is however still 140.7% higher for the year to date and Amplats gained 139.8% over the same period.

The interest shown in the diamond industry by billionaire Christo Wiese gave Trans Hex [JSE:TSX] a boost and the share price was one of the top performers, gaining 4.28% to R3.90. Wiese recently bought 47% of the alluvial diamond producer and said there is potential in the consolidation of the diamond industry. Trans Hex gained more than 33% over the past six months.

READ: Why diamonds are a billionaire like Wiese’s best friend

Naspers [JSE:NPN], which reached a new all-time high of R2 335 on Monday, took a breather in morning trade and at mid-morning was 0.64% softer at R2 319.97.

There was interest in the retail sector after Shoprite [JSE:SHP] announced better-than-expected results. The group’s full-year profit rose 17%, beating analyst estimates as it benefited from sales growth outside South Africa.

READ: Shoprite profit rises 17% amid tough retail conditions

Headline earnings per share, which excludes one-time items, were R9 a share in the 12 months to June 30, higher than analysts' expectations of R8.66/share. The board declared a final dividend of R2.96/share, bringing the year’s total payout to R4.52, also a rise of 17%.

Shoprite gained 1.43% to R201.83. Although the share price is still lower than the 52-week high of R208.70 reached on August 11 this year, it gained 21.6% over the past 30 days before Tuesday’s trade.

Pick n Pay [JSE:PIK] reached an intraday 52-week high of R54.24 in early trade, but at mid-morning was 1.53% lower at R84.24.