Publications
Partners
Joahnnesburg - Resources shares were the star performers on Tuesday on the JSE as commodity prices continued their strong recovery. This was in response to surveys in Europe and the United States indicating that business activity - and manufacturing in particular - was at the highest level for the year.
Increased steel production in China and rising steel prices pushed iron ore prices to the highest level since mid-2015; the zinc price reached the highest level in five years and coal prices also reached new peaks after weeks of gains.
Global shares were higher in the light of better business prospects, while European markets were pulled higher by the big mining companies, some of which are also listed on the JSE.
By mid-morning the Resources index on the JSE was 0.68% firmer with all the big mining groups trading substantially higher. By mid-morning BHP Billiton [JSE:BIL] was the busiest share on the JSE in terms of volume and value, with more than 8 million shares trading for over R1.6bn.
The All-share index was at that stage 0.30% higher at 51 837 points, while the Top 40 index traded 0.27% stronger at 45 256 points. The major indices however started to drift lower towards midday.
The Industrial index, which includes most of the big dual-listed shares, was also pulled higher by firmer European markets, but the strong rand put a cap on possible gains. The index was 0.32% up by mid-morning.
The rand traded more than 1% stronger at R13.86 to the dollar, as doubts over the tenure of Finance Minister Pravin Gordhan abated in the face of public support from business leaders and ANC officials.
The Financial index was however 0.28% lower as investors await the mid-term budget on Wednesday, to see if Gordhan can do enough to stave off a downgrade of South Africa’s credit rating at the end of the year.
Global risk appetite was aided by the latest Markit survey of US manufacturing, which climbed to a one-year top of 53.2. Business activity in the eurozone expanded at the fastest pace so far this year in October and firms raised prices at the sharpest rate in more than five years.
The good news increased the probability of a December rate hike from the Federal Reserve to about 74%, which put bond yields under pressure to the benefit of stock markets.
Anglo American [JSE:AGL], Glencore []JSE:GLN] and South 32 [JSE:S32] all continued their strong run in the resources sector, reaching new 52-week highs. All three stocks traded at 52-week lows in early January and have since gained between 100% and 180% for the year to date.
The best performer is Anglo American, which before Tuesday’s trade was already 180.41% higher for the year to date. The share gained 3.46% to a new high of R188.25, after falling as low as R53.30 in January this year.
Glencore was 1.70% firmer at a new high of R41.33, after falling to R17.53 in January. This means that before Tuesday’s trade the share price rose 32.9% over the past 90 days and 103.7% for the year to date.
South32 at mid-morning was 1.45% higher on a new 52-week high of R28.00, far above the 52-week low of R10.25 reached in early January. The gain for the year to date, before Tuesday’s trade, is 135.90%.
BHP Billiton's gains this year were more subdued and before Tuesday the stock was only 22% higher for the year to date. In morning trade the share price added 1.18% to R210.00.
Kumba [JSE:KIO] and ArcelorMittal [JSE:ACL] were also major beneficiaries from higher steel and iron ore prices. Kumba, which reached a low of only R25.35 in January, gained 4.22% to R135.90. In August the stock was as high as R148.01 but on Monday’s level it is still an unbelievable 256.8% higher for the year to date.
ArcelorMittal, which in December last year stood at only R2.90 per share, on Tuesday traded a solid 6.45% higher at R11.71.That means the share was already 158.82% higher for the year before Tuesday.
Among the big dual-listed shares in the rest of the market, Naspers [JSE:NPN] lost 0.33% to R2 397.02, Steinhoff [JSE:SHF] traded 0.31% lower at R75.07 and Richemont [JSE:CFR] firmed 0.37% to R91.62.
MTN [JSE:MTN] gained a strong 5.57% to R115.57 as investors were heartened by news that the group’s new chief executive Rob Shuter will take over three months ahead of plan.
