Miners drag SA market lower

Johannesburg - South African stocks fell on Monday, dragged down by softer metals prices that knocked mining shares, while the rand recoiled on dollar strength and more central bank comments hinting at intervention.

The JSE top-40 index of blue chips fell 1.08% to 20,720.02 points, while the all-share index shed 0.94% at 22,949.09 points.

"The dollar index had its biggest move for the year on Friday. I think we saw commodity prices come off on the back of that, and we're also seeing a bit of risk aversion coming back," said Andrew Todd, a trader at BOE Private Clients.

"Resource stocks are down on weaker metal prices."

Anglo Platinum was the biggest loser amongst the local blue chips, slipping 5.92% to R588. Diversified miner Exxaro lost 5.50% at R77.50.

Lower world markets also weighed as sentiment fell after speculation the US Federal Reserve may have to tighten interest rates sooner than expected.

The rand was trading at 8.1850 against the dollar at 17:40, 1.7% weaker than its previous close in New York, having dipped to a session low of 8.2355.

Traders said risk aversion boosted the dollar, while comments from the central bank that it favoured limited intervention to guard against excessive currency moves helped reverse some recent gains.

"There is dollar strength across the board, it means that risk aversion is taking place," Global Traders' Neil Barnard said.

On comments by central bank Governor Tito Mboweni on the currency, he said: "I think it is marginal, but it will have an impact."

Mboweni was quoted as saying the bank could "lean against the wind" to counter extreme currency moves, after last week warning that the rand's strength may be unwelcome.

The remarks, and data last week that showed a jump in reserves, suggest the bank will take advantage of relative rand strength to build up its holdings, thereby capping short-terms gains in the currency.

The local unit hit a near-9-month high against the dollar a week ago and a 15-month peak against the euro earlier in May.

Government bonds slipped with the rand, failing to take advantage of the dip in local stocks.

The yield, which moves inversely to the price, on the 2015 bond was up 4 basis points for the session at 8.475%, while the 2036 yield added 3 basis points to 8.60%.

On the bourse, other big losers included media giant Naspers, which was down 4.81% to R197.99 and supermarket group Pick 'n Pay was 3.31% lower at R33.84.

Investment holding firm Remgro bucked the general downward trend, climbing 1.93% to R75 after it said it was in merger talks with Venfin Ltd.

- Reuters