Publications
Partners
Johannesburg - Resources shares rose strongly on the JSE on Wednesday morning, as data showed Chinese exports stabilised and optimism grew over prospects for stimulus in major economies.
The rest of the JSE was however not as fortunate as financial and gold shares fell victim to profit-taking. By mid-morning the All-share index was 0.55% higher at 52 839 points and the Top 40 index had gained 0.60% to 46 331 points. At that stage the Resources index was 1.25% stronger, with Kumba [JSE:KIO] reaching an intraday 52-week high while the Industrial index traded 0.64% up.
The Financial index, the star performer of the previous two days, was however 0.06% lower and the Gold index lost 0.85%.
Earlier the exuberance on global markets continued and a broad rally on Wall Street lifted the S&P 500 and Dow industrials to record highs on Tuesday, backed by the view that the US economy, despite a slow start to the year, is on solid footing.
Asian shares also came within reach of their 2016 highs on Wednesday and emerging market stocks rose to the highest level in eight months. MSCI's broadest index of Asia-Pacific shares outside Japan rose to 427.83, just below its year-to-date high of 428.22 hit on April 21.
Global equities have now regained the almost $4trn in value lost in the days following the UK’s June 23 vote to leave the European Union, boosted by signs policy makers are prepared to act to limit the fallout.
Economists expect the Bank of England to cut interest rates on Thursday, while Japanese Prime Minister Shinzo Abe has ordered more fiscal stimulus after a convincing election victory.
Bank of England governor Mark Carney said on Tuesday that the expected hit to Britain’s economy from the Brexit vote could prompt the central bank to provide more stimulus.
Although the JSE improved for the third day this week, the local market is still somewhat behind its overseas counterparts, most of which have regained all the losses suffered when the news about Brexit became known.
The All-share index at mid-morning was more than 5% higher than the 50 086 points it reached on June 24, the day the Brexit result was announced, but it is still about 1.4% below 53 585, the closing level on the day before the British referendum.
The index is also still about 3.4% lower than the year-high of 54 474 reached on May 29, and more than 4% below the all-time high of 55 188 points achieved in August last year.
The high flyers in the resources sector were all quick out of the blocks on Wednesday morning, and in early trade the Resources index was more than 1.7% higher, however losing momentum later on.
At one stage on Wednesday Kumba was more than 6% firmer on a new intraday 52-week high of R140.50, but by mid-morning it was only 3.92% up at R131.93.
Despite the spectacular recoveries from historical lows made by some resources shares over the past six months, they are still way behind their all-time highs. In fact, the long-term return on resources shares is still poor.
Before Wednesday’s trade Kumba was more than 400% higher over the past six months as the stock fell as low as R25.00, but the share traded as high as R610 in June 2013. It is therefore still 72.28% lower over three years and 74.86% down over five years.
Anglo American [JSE:AGL] started Wednesday’s trade 160.86% higher over the past six months and gained 2.47% to R160.86, but delivered a negative return of 50.03% over five years as the share price was as high as R344.00 early in 2012.
ArcelorMittal [JSE:ACL] gained 4.42% to R8.97 and the share price is now more than 100% higher over the year to date, but over five years it is still 88.98% lower as it traded as high as R75.10 exactly five years ago.
BHP Billiton [JSE:BIL] traded 2.87% firmer at R194.70, delivering a return of 24.6% over six months but a negative return of 29.5% over five years. Glencore [JSE:GLN] gained 3.24% and is now 97.03% higher over six months.
FirstRand [JSE:FSR] and Barclays Africa [JSE:BGA] were the busiest shares in the banking sector, with FirstRand losing 1.08% to R46.01 but Barclays Africa gaining 0.33% to R143.47. Old Mutual [JSE:OML] traded 1.89% stronger at R39.27.
Steinhoff [JSE:SHF] shares were only 0.42% higher at R85.35 in response to the news that the group will make a firm cash offer of £597m for all the shares in the British discount group Poundland.
The British group’s board will recommend that its shareholders accept the offer of 222 pence per share, 39% higher than the current price of 158.35p.
