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Retail sector in focus on JSE

Johannesburg - Most of the attention on the JSE was on the retail sector on Wednesday, after positive news from Woolworths [JSE:WHL] regarding its expected sales for the current year.

By midday on Wednesday Woolworths and Shoprite [JSE:SHP] were among the three busiest shares on the JSE in terms of value, with Woolworths trading sharply higher.

The share price of Woolworths was already 6% higher than on Tuesday by early afternoon trade on R100.47.

The higher share price is the result of the expectations that Woolworths will beat estimates with its annual sales next month after the upscale retailer said on Wednesday revenue is likely to surge.

The retailer said sales were boosted by the first time contribution from David Jones, an Australian department store chain it acquired in August last year.

Excluding the impact of David Jones, sales grew 12%, which is slightly slower than a year ago, reflecting slack consumer spending in its mainstay South African market.

There was also very brisk trade in Shoprite shares. By midday 2.4 million shares were sold for more than R315m in 3 288 deals. The share price did, however, not follow Woolworths higher and was by early afternoon trade it was 0.9% lower on R170.50. The share rallied strongly lately and is more than 8% higher over the past 30 days.

The better mood in the retail sector spread to the rest of the market with all the major indices higher by midday on Wednesday. By early afternoon the All-share index was 0.64% higher on 52 443 points, while the Top-40 index gained 0.65% to 46 872 points.

The best performing sector was resources, which gained 1.41% in response to the news that the Chinese economy expanded by 7% in the second quarter - better than what analysts expected.

This better than expected growth in China is good news for South African commodities. BHP Billiton [JSE:BIL] gained 1.81% by early afternoon on Wednesday to R242.39 and Anglo American [JSE:AGL] was 3.2% higher on R172.36, after trading at a 52 week low of R169 earlier in the week.

Platinum shares were amongst the strongest performers in the resources sector. Lonmin [JSE:LON], which lost almost 20% of its value over the weekend after the share was downgraded by analysts in London, continued its recovery and traded 7.09% higher on R15.85.

Anglo American Platinum [JSE:AMS], which announced on Monday that its earnings will be much better than the previous year, gained another 3.6% to R267.05. Impala Platinum [JSE:IMP], which traded on a 52 week low earlier in the week, recovered with 4.15% to R51.66.

The markets in China and Hong Kong, did not gain on the news about the better than expected growth in China, as investors fear the news will likely put off any fresh growth-boosting measures.

Naspers [JSE:NPN], which has huge exposure to the Chinese economy through its stake in the Chinese internet giant Tencent, which is listed in Hong Kong, therefore, did not move much on Wednesday and was down 0.13% at R1 857.67.

The industrial index was 0.62% higher as Sasol [JSE:SOL] gained 1.82% to R435.57 and SABMiller [JSE:SAB] 0.44% to R670.99.

The financial index was 0.91% higher with FirstRand [JSE:FSR] gaining 0.57% to R55 and Standard Bank [JSE:SBK] was down 0.05% to R159.12.

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