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Sasol shines as oil price surge lifts JSE resources

Dec 12 2016 12:06
David van Rooyen

Johannesburg - Sasol [JSE:SOL] was one of the top performers on the JSE on Monday as oil prices jumped to their highest levels in a year-and-a-half on Monday, after Opec and non-Opec producers agreed to cut oil output to ease a global glut.

In early trade Sasol was one of the busiest shares on the JSE in terms of volume and value, and the share price traded 6.29% higher at R405.54. Shares worth more than R100m were traded in the first 30 minutes. It is the first time since October 9 that the share price is above R400.

Sasol’s income from synthetic fuel from coal is determined by the fuel price, and a higher oil price means the group also receives more in dollars for its fuel.

The agreement between Opec and a number of other oil-producing nations was the first joint action since 2001, following more than two years of low prices that strained many governments' budgets and spurred unrest in countries from the Middle East to Latin America.

By mid-morning the price of Brent of crude had gained more than 5.44% to $56.82.

The higher oil price also had an influence on the rest of the market, as it raises the prospect of higher inflation before a Federal Reserve meeting this week at which a hike in US interest rates is widely expected.

A rare spike in producer prices in China prompted investors to worry that inflationary pressure is making a global comeback. The 10-year US Treasuries yield rose as high as 2.5% in Asian trade, matching its 2015 peak.

Higher interest rates in the US could lead to an outflow of capital from emerging markets back to the US, including South Africa, as the risks in the US are perceived to be lower. Latest data is already showing an outflow from emerging markets.

The local market was still in the black on Monday but would have been lower were it not for resources shares gaining 1.87% by mid-morning, on the back of higher energy prices. The All-share index was at that stage 0.51% higher at 51 162 points, while the Top 40 index gained 0.60% to 44 493 points.The Industrial index was 0.13% up, while the Financial index was 0.23% stronger.  

The two biggest commodity shares on the JSE, Glencore [JSE:GLN] and BHP Billiton [JSE:BIL], both traded at new 52-week highs. Glencore, which gained 28.7% before Monday’s trade over the past 30 days, was 1.05% higher on a new high of R52.95. The share price increased 162.66% for the year to date.

BP Billiton, which also has interests in oil and gas, was a solid 3.22% higher on a new high of R244.24. The share price performed far more modestly than Glencore, gaining 16.4% over the past 30 days and 39% for the year to date.

Anglo American [JSE:AGL] was only 0.98% higher at R216.04 but South32 [JSE:S32] lost 1.29% to R29.91.

Gold shares were under the whip again after the gold price hit its lowest levels since early February. Harmony [JSE:HAR] was the biggest loser, dropping 5.82% to R27.83, while Gold Fields [JSE:GFI] was 4.91% lower on a new 52-week low of R391.12.

Sibanye [JSE:SGL], which closed more than 15% lower on Friday on news that the gold mining group paid $2.2bn for US platinum group Stillwater, recovered on Monday and traded 1.92% higher at R24.47.

The top three South African banks all reached new 52-week highs on Monday morning, with Barclays Africa [JSE:BGA] gaining 1.28% in morning trade. Before Monday’s trade the stock was 5.585% higher over the previous seven days.

Standard Bank [JSE:SBK] was 0.89% up on a new high of R156.72, and FirstRand [JSE:FSR] was 0.41% firmer on a high of R54.28. Standard Bank gained more than 8% over the previous seven days and FirstRand is more than 11% higher than a week ago.

equities  |  jse  |  markets
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