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Strong rand caps JSE gains

Johannesburg - Share prices on the JSE followed global markets higher on Monday, but the gains were very modest as the strong rand put a cap on the prices of the big dual-listed shares.

Wall Street improved modestly on Friday on better-than-expected job creation figures and on Monday morning shares prices in Asia and London also crept higher. The dollar however continued its decline, which helped the rand reach the highest level in almost three months.

At mid-morning the rand was R13.29 to the dollar, the strongest level since November 7 last year when it traded at a 52-week high of R13.22. The unit also firmed 1.18% against the pound to R16.53/£ and 0.80% against the euro to R14.29/€.

A strong rand makes local shares more expensive for foreign buyers, who are already net sellers of South African shares and bonds. Latest data indicated foreign investors offloaded close to R18bn in bonds and equities during January.

The JSE therefore showed very moderate gains at mid-morning on Monday, much lower than early in the session. At that stage the All-share index was 0.24% higher at 52 388 points, while the Top 40 index gained 0.32% to 45 563 points.

The Industrial and Resources indices, which include most of the dual-listed shares, were the best performers. The Industrial index was 0.39% higher and the Resources index 0.26% stronger. The Financial index, which normally responds positively to a firm rand, at mid-morning was only 0.02% up.    

Friday's payrolls data also showed US jobs jumped more than expected in January as construction firms and retailers ramped up hiring, but wages growth still slowed. Analysts said the mixed payroll report validated the Federal Reserve’s policy of a gradual tightening of monetary policy.

Such a cautious outlook keeps the dollar under pressure. The US currency is already feeling the heat as investors are concerned about US President Donald Trump’s protectionist policies, while the market is still waiting for news on the fiscal stimulus Trump promised in his election campaign.

Asian markets did not respond much to a private survey out of China that showed activity in the services sector remained strong in January as companies reported a solid increase in orders, though the pace of growth eased.

Good economic news out of China is beneficial for resources shares, as China is the biggest consumer of South African commodities.

Naspers [JSE:NPN] which owns 34% of the Chinese internet giant Tencent, is one of the companies benefiting from good news about the Chinese economy. The share traded 1.83% stronger at R2 221.83.

Steinhoff [JSE:SHF] gained 1.07% to R67.06. The stock was also stronger on Friday after it lost more than 11% over the past three months amid investor concern over a proposal that Shoprite [JSE:SHP] take over Steinhoff’s interest in Africa in exchange for shares in Steinhoff. Shoprite lost 1% to R176.07.

Commodity giants hardly moved. BHP Billiton [JSE:BIL] was only 0.10% higher at R232.54 and Anglo American [JSE:AGL] gained only 0.11% to R222.60.

The best performers were companies related to the steel industry. ArcelorMittal [JSE:ACL] set a new 52-week high by trading 5.30% higher at R14.90. The share price gained more than 50% over the past 90 days.

Kumba [JSE:KIO], the iron ore producer which gained more than 76% over the past 90 days, was 4.15% stronger at R204.19.

Rand Merchant Bank Holdings [JSE:RMH], the holding company of FirstRand [JSE:FSR], was one of the busiest shares in the financial sector and gained 0.64% to R64.46. FirstRand [JSE:FSR] was 0.89% higher at R50.00. Standard Bank [JSE:SBK] was 0.55% softer at R142.22.


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Rand - Dollar
18.89
+0.2%
Rand - Pound
23.82
+0.4%
Rand - Euro
20.37
+0.3%
Rand - Aus dollar
12.30
+0.3%
Rand - Yen
0.12
+0.2%
Platinum
908.05
0.0%
Palladium
1,014.94
0.0%
Gold
2,232.75
-0.0%
Silver
24.95
-0.1%
Brent Crude
87.00
+1.8%
Top 40
68,346
0.0%
All Share
74,536
0.0%
Resource 10
57,251
0.0%
Industrial 25
103,936
0.0%
Financial 15
16,502
0.0%
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