Resources up as lacklustre JSE awaits Fed rate hike move

Mar 15 2017 13:46
David van Rooyen

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Johannesburg - Resources have been the only shares on the JSE gaining somewhat on Wednesday, as the rest of the market is still waiting like global markets elsewhere to see what the Federal Reserve will announce later in the day on US interest rates.

Resources shares, which dropped sharply over the past month but showed signs of a turnaround earlier in the week, have been supported by strong economic data out of China, still the world's biggest consumer of commodities.

Investors are certain that the US central bank will announce a rate hike tonight, and such a possibility is already priced into share prices, but will study the Fed’s announcement for any indication of future interest rate policies.

The expectation is that the Fed might hike interest rates more quickly than originally expected.

Besides the Resources index, which was 1.04% higher by mid-morning, financial shares traded 0.22% stronger on prospects of higher interest rates.

The Industrial index, which includes most of the big capitalisation shares on the JSE, was however 0.18% lower and this put a cap on the All-share index which at mid-morning was only 0.12% higher at 51 765 points. The Top 40 index was was only 0.21% up at 44 746 points.

Analysts said the resources sector rally is dependent on how sustainable the recovery in the Chinese economy is.

"China's economy had a pretty good performance in January and February. March data will be crucial as investors are anxious for any hint on whether the recovery is sustainable," said Linus Yip, strategist at First Shanghai Securities.

Chinese Premier Li Keqiang said at a press conference that China's economy faces domestic and external risks this year, but added the country has many policy tools to cope with them.

Glencore [JSE:GLN] was the best performer among the big commodity conglomerates and traded 2.52% higher at R51.57. Anglo American [JSE:AGL], one of the busiest shares on the JSE in terms of value, was 1.39% stronger at R191.50 and BHP Billiton [JSE:BIL] gained 1.83% to R206.95.

The copper price was slightly higher on news that BHP Billiton plans to restart operations at the Escondida copper mine in Chile, after striking workers again rejected an invitation to return to negotiations.

Barclays Africa [JSE:BGA] was one of the strong performers in the financial sector, gaining 2.09% to R151.37. FirstRand [JSE:FSR] was 0.80% higher at R51.72 and Standard Bank gained 0.49% to R158.25. That means Standard Bank is now only 25c below the 52-week high of R158.50 set on March 5 this year.

Discovery [JSE:DSY] is still the high flyer in the insurance sector and set a new intraday 52-week high of R133.80 in early trade. The share later lost momentum and at mid-morning was 0.38% softer at R132.70 after setting a 52-week high of R132.70 on Tuesday.

Good economic news from China led to a rally on the Hong Kong market, but that did not benefit Naspers [JSE:NPN] which traded 0.15% lower at R2 175.50. Naspers is linked to the Hong Kong market through its shareholding in China's biggest internet company Tencent, which is listed on the Hong Kong Stock Exchange. Tencent traded unchanged at HK$214.00.

Naspers’ share price has been stagnant lately and is now only 0.96% softer than a month ago.

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equities  |  jse  |  markets



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