Publications
Partners
Johannesburg/Frankfurt - South African stocks closed at a new lifetime high on Wednesday, gaining more
the 1 percent as positive earnings statements and upbeat economic data from
China helped lift resources firms such as Assore.
Non-tech US blue chips surged more than 1% after a report showed the pace of growth in US manufacturing picked up in January to its highest level since June as new orders improved, adding to optimism from reports elsewhere in the world.
“The overall economy lacks oomph and is having trouble creating jobs. Manufacturing is one of the few bright spots in an otherwise disappointing story,” said Cary Leahey, managing director at Decision Economics.
An unexpected expansion in China’s powerful factories in January and the first growth in German manufacturing in four months underpinned a rally that lifted equity markets in Europe about 2% and provided US markets an early boost.
Still, manufacturing surveys from around the world remained relatively grim, with crumbling demand in Europe holding back more buoyant economies in Asia.
However, some key numbers were better than feared, and combined with hopes that Greece is edging towards a comprehensive deal on restructuring its debt, helped ease investors’ jitters.
China’s official purchasing managers’ index showed the factory sector expanded slightly in January and the separate indicator from bank HSBC contracted the least in three months.
The Dow Jones industrial average was 1.14%, Standard & Poor’s 500 Index was up 1.05% and the Nasdaq Composite Index was 0.78%.
MSCI’s all-country world stock index rose 1.3%, while the FTSEurofirst 300 index of top European shares gained 1.9% to hit a six-month high.
Greek hopes
The euro rallied on renewed optimism that Greece will reach a deal with its creditors while brewing tension between Iran and the West helped push Brent oil futures above $112 a barrel, putting it on track for its highest close in three weeks.
“People are believing a Greek deal is imminent,” said Dean Popplewell, chief currency strategist at OANDA in Toronto. “They are probably over zealous on that and we are still in the same tight trading range.”
The euro was up 0.7% at $1.3172.
Cautious optimism that the eurozone crisis may be turning a corner fueled demand for European government debt and eased pressure on Portugal, considered the most vulnerable country in Europe after Greece.
Greek Finance Minister Evangelos Venizelos said talks with private creditors on a bond swap deal that is key to the country avoiding an unruly default were “one formal step away.”
US Treasuries prices fell as European risk assets improved, dampening demand for the safe haven bonds, and as buying ebbed following a day of large month-end purchases on Tuesday.
The benchmark 10-year US Treasury note was down 13/32 in price to yield 1.84%. Brent crude futures pared gains and US crude turned negative after the release of EIA data.
Brent crude was up $1.26 at $112.24 a barrel, heading for its highest close since Jan 11. US crude was up 13 cents at $98.61.
Shares of Absa, the South African lender controlled by Barclays,
ended up 0.3% at 149.20 having earlier declined on news its veteran
deputy CEO would step down next year.
“There is a lot of positive trading statements being released in
our market in the last few days,” said Betzi Yang, trader at Legae Securities.
“There is risk appetite. People are looking for a bit of a return.
With a low interest environment, the only place where they can seek a bit of
return is the equity market.”
The All Share [JSE:J203] index, closed at its highest level in its 17 year
history, finishing up 1.03% at 34 139.52 and marking at least its
seventh record close since the start of the year. The Top 40 - (Tradeable) [JSE:J200] added 1.1% to 30 518.66, its highest close since May 2008.
Banking group Absa, investment holding company Mvelaphanda,
bathroomware retailer Italtile and information storage firm Metrofile were the
latest companies to flag growth in profits.
Absa, which briefly lost ground in afternoon trade on news its
deputy chief would be stepping down, said on Wednesday its full-year earnings
likely rose by as much as 22%.
Base metal miner Assore topped the charts after jumping 7.5% to R245.19, extending gains after announcing on Tuesday it expected to post
half-year earnings nearly double those it reported a year ago.
Gold miners took a softer tone as risk appetite returned to
markets. Second-placed producer Gold Fields lost 1.1% to R127.55.
Technical analysis would caution that the valuations are
overheating with South African stocks now trading at a price-to-earnings ratio
of more than 13, putting them roughly on line with U.S. stocks, according to
Thomson Reuters data.
“It is quite phenomenal, the run that we’ve had,” said Nic
Norman-Smith of Lentus Asset Management. “All you can do is buy the cheap stuff,
avoid the expensive stuff and the crash will probably come when one least
expects it.”
Trade was relatively active, with 200 million shares changing hands
on the boursee, according to preliminary exchange data and compared to last
year’s daily average of 256 million shares.
The euro and global equity markets rose as investors shrugged off signs of crumbling global demand and a slowing pace of US private sector job creation to latch on to encouraging US, Chinese and German manufacturing data. Non-tech US blue chips surged more than 1% after a report showed the pace of growth in US manufacturing picked up in January to its highest level since June as new orders improved, adding to optimism from reports elsewhere in the world.
“The overall economy lacks oomph and is having trouble creating jobs. Manufacturing is one of the few bright spots in an otherwise disappointing story,” said Cary Leahey, managing director at Decision Economics.
An unexpected expansion in China’s powerful factories in January and the first growth in German manufacturing in four months underpinned a rally that lifted equity markets in Europe about 2% and provided US markets an early boost.
Still, manufacturing surveys from around the world remained relatively grim, with crumbling demand in Europe holding back more buoyant economies in Asia.
However, some key numbers were better than feared, and combined with hopes that Greece is edging towards a comprehensive deal on restructuring its debt, helped ease investors’ jitters.
China’s official purchasing managers’ index showed the factory sector expanded slightly in January and the separate indicator from bank HSBC contracted the least in three months.
The Dow Jones industrial average was 1.14%, Standard & Poor’s 500 Index was up 1.05% and the Nasdaq Composite Index was 0.78%.
MSCI’s all-country world stock index rose 1.3%, while the FTSEurofirst 300 index of top European shares gained 1.9% to hit a six-month high.
Greek hopes
The euro rallied on renewed optimism that Greece will reach a deal with its creditors while brewing tension between Iran and the West helped push Brent oil futures above $112 a barrel, putting it on track for its highest close in three weeks.
“People are believing a Greek deal is imminent,” said Dean Popplewell, chief currency strategist at OANDA in Toronto. “They are probably over zealous on that and we are still in the same tight trading range.”
The euro was up 0.7% at $1.3172.
Cautious optimism that the eurozone crisis may be turning a corner fueled demand for European government debt and eased pressure on Portugal, considered the most vulnerable country in Europe after Greece.
Greek Finance Minister Evangelos Venizelos said talks with private creditors on a bond swap deal that is key to the country avoiding an unruly default were “one formal step away.”
US Treasuries prices fell as European risk assets improved, dampening demand for the safe haven bonds, and as buying ebbed following a day of large month-end purchases on Tuesday.
The benchmark 10-year US Treasury note was down 13/32 in price to yield 1.84%. Brent crude futures pared gains and US crude turned negative after the release of EIA data.
Brent crude was up $1.26 at $112.24 a barrel, heading for its highest close since Jan 11. US crude was up 13 cents at $98.61.
