Johannesburg - Bucking the global trend, the JSE was marginally firmer
on Wednesday, bolstered by stronger resources amid speculation that
Australia may have second thoughts about the imposition of a mining royalty tax.
The
speculation comes in the wake of reports that opposition against the proposed 40% tax on
the so-called "super profits" of Australian mining companies is
gathering momentum.
Elsewhere on Wednesday, world markets were down as concerns about further possible
fallout from the Greek debt crisis continued to weigh.
By 12:00 the JSE all share index was 0.18% firmer with resources up 0.72%. Platinum
miners however were down 1.06%, but gold miners were up 0.44%. Banks dropped 0.48%, financials shipped 0.21%, and industrials were 0.22% softer.
The rand was bid at R7.57 to the dollar from R7.56 at the JSE's close on Tuesday. Gold was
quoted at $1 170.94/oz a troy ounce from $1 173.78/oz at the JSE's last
close. Platinum was at $1 677/oz from $1 687/oz at the JSE's last close.
"The local market is firmer on the back of speculation that Australia might shelve the idea
of a mining tax owing to mounting opposition because it won't be good for
the economy. But the market remains very volatile and very mixed," a
local equities trader said.
Dow Jones Newswires reported that European stocks fell on Wednesday, along with the euro, as
fears of contagion into the peripheral European sovereign debt markets once
more worried investors.
As far
as equities are concerned, banking stocks posted the biggest losses as investors
worried about the sector's exposure to the debt of countries such as
Spain, Portugal and Greece.
"There is widespread banking exposure to Greece with French and German banks holding most of
the debt, but UK banks have a large exposure to Spanish debt,"
said David Morrison, strategist at GFT. "As I understand it, RBS and Lloyds are
particularly exposed, which explains their sell-off."
Meanwhile, investors continued to question the viability of the Greek rescue package, as
thousands of public and private sector workers prepared to join a nationwide
strike on Wednesday to protest against the austerity measures the country
needs to implement in return for its aid package. The Greek parliament is
expected to vote on those measures on Thursday, while on Friday, European
leaders will hold a summit to approve the bailout.
"Despite
hearing that the majority of the Greek population understand and accept the need for
austerity measures, the ongoing strike action and civil unrest are a stark
reminder of how angry many Greek citizens are. I would imagine the
government is extremely nervous as they begin to implement the measures," said
Morrison.
Several Asian markets fell sharply on Wednesday on heightened risk aversion amid deepening
concerns over Europe's fiscal health, with commodity stocks and financials
hurting the most.
But shares
traded in mainland China ended higher as investors looked for bargains in property
and banking sectorafter the Shanghai benchmark index plumbed depths around
seven month-lows earlier in the day.
Hong Kong's
Hang Seng Index lost 2.1%, while the Hang Seng China Enterprises Index,
which includes several large-capital Chinese stocks, skidded 2.7%, though
the Shanghai Composite rose 0.8%. Taiwan's Taiex fell 3.0%, Australia's
S&P/ASX 200 lost 1.3%, New Zealand's NZX 50 dropped 1.5% and India's Sensex
fell 0.8% in afternoon trading.
"Funds
have already been flowing out of equities toward fixed income and other less-risky
assets and this is likely to continue for some time, with Europe's fundamental
debt problems unlikely to be solved soon," said Alex Huang, assistant vice
president at Mega Securities in Taipei.
Meanwhile US stocks are called to open slightly lower, as European stocks remain under
pressure and Europe's sovereign debt problems remain in focus. David Morrison
at GFT calls DJIA down seven points at 10920 and S&P 500 down one point at
1172.5. In economic news, the ADP employment data at 14:00, will be of
interest. Morrison says this series of data on the private sector is
painting a grimmer picture than nonfarm payrolls data, the
latest of which come
on Friday. ISM non-manufacturing data are coming on Wednesday at 14:00.
- I-Net Bridge