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JSE remains hobbled by poor economic prospects

Johannesburg - Share prices on the JSE opened sharply higher on Monday in response to a rally on world markets, but lost momentum shortly after that and started to move sideways.

At mid-morning the two major indices were just a tad below 1% up on Friday’s close, but in earlier trade were about 0.6% higher.

It seems concerns about the local economy still weigh on investors' minds, after the International Monetary Fund warned last week that the economy would grow as little as 0.1% this year. Rating agency Moody’s warned over the weekend that a possible rise in global risk aversion, linked to Britain’s decision to leave the European Union, could impede South Africa’s economic recovery.

Elsewhere in the world Asian markets reached a four-week high on Monday morning, after the S&P 500 Index on Wall Street just missed a new record at the Friday close. European markets were also higher by mid-morning.

The global rally started after an upbeat US jobs data report soothed immediate concerns about the health of the world's largest economy, while the prospect of more policy stimulus helped keep sovereign yields near record lows.

By mid-morning the All-share index was 0.94% higher at 51 761 points after trading as high as 52 026 points shortly after the opening, while the Top 40 index gained 0.94% to 45 351 points, about 0.6% lower than the day’s high of 45 621 points.
Markets were boosted by news that US economy added 287 000 jobs last month, well above median forecasts and recovering from a weak May report.

Investors however concluded that the data was not strong enough to revive the prospect of a rate hike from the Federal Reserve for the next few months, benefiting bonds and stocks. There will be more clarity this week, when several Fed officials are scheduled to speak.

Most of the attention this week is on Thursday’s meeting by the Bank of England, and expectations are that the bank might well cut its 0.5% interest rate to offset the economic drag from Britain's vote to leave the EU.

Various reports out on Monday argued for urgent action, with consumer spending falling last month, the business outlook darkening by the most in four years and economic activity in London slowing sharply.

The ruling coalition in Japan won a landslide victory in the country’s upper house, giving Prime Minister Shinzo Abe more room to introduce a fresh fiscal stimulus package. Tokyo's Nikkei Index rose more than 4%, its biggest daily gain in three months.

China’s consumer inflation grew at its slowest pace since January, reinforcing economists’ views that more government stimulus will be needed to support the economy.

A stimulus for the Chinese economy to boost demand could be positive for resources and the Resources index was the best performer on the JSE, gaining 2.02%. Two of the three dual-listed commodity giants on the JSE, Anglo American [JSE:AGL] and Glencore [JSE:GLN], both gained more than 5%. Anglo traded 5.2% higher at R147.39 and Glencore was 5.21% stronger at R32.93. BHP Billiton [JSE:BIL] gained 1.75% to R183.99.

South 32 [JSE:S32], which was unbundled from BHP Billiton recently, traded at a new 52-week high on Monday morning as the share gained 6.11% to R20.11. Before Monday’s trade the share price, which after its listing dropped to as low as R10.95, was 32% higher over the previous 30 days and 85.3% up over the past six months.

Exxaro [JSE:EXX], a producer of coal and iron ore, traded 5.28% higher at R75.11. Monday’s boost was almost as much as last week’s gain of 5.7%.

Royal Bafokeng Platinum [JSE:RBP], which almost doubled over the past six months on the back of the platinum price recovery, gained 5.72% to trade at a new 52-week high of R52.49. At mid-morning the platinum price was 0.92% higher at $1 092, 18.5% up on six months ago. Northam Platinum [JSE:NHM] gained 4.50% to R46.88.

The Financial index was 1.15% stronger on Monday morning, with insurance shares in high demand. MMI Holdings [JSE:MMI] was the busiest share in terms of volume, gaining 1.92% to R22.24. There was also brisk trade in Old Mutual [JSE:OML] and the share was 0.78% higher at R32.79.

Standard Bank [JSE:SBK] gained 2.63% in the banking sector and traded 2.63% up at R127.37. FirstRand [JSE:FSR] was 1% stronger at R44.61.

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Rand - Dollar
18.94
-0.2%
Rand - Pound
23.91
-0.1%
Rand - Euro
20.43
+0.2%
Rand - Aus dollar
12.34
+0.1%
Rand - Yen
0.13
-0.2%
Platinum
910.50
+1.5%
Palladium
1,016.25
+1.4%
Gold
2,221.48
+1.2%
Silver
24.88
+1.0%
Brent Crude
86.09
-0.2%
Top 40
68,346
+1.0%
All Share
74,536
+0.8%
Resource 10
57,251
+2.8%
Industrial 25
103,936
+0.6%
Financial 15
16,502
-0.1%
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