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Johannesburg - The strong rand is beginning to hurt resources companies on the JSE, and the sector was the big loser on Wednesday morning, shedding almost 1% in early trade.
This was despite some good news about the Chinese economy, the biggest consumer of commodities. Resources shares recovered somewhat in later trade and the rest of the market did not move much, with the other major indices only marginally higher.
The rand traded at R12.96 to the dollar early on Wednesday. A strong local unit means mining companies receive less in rand for their exports.
BHP Billiton [JSE:BIL], the biggest commodity share on the JSE, was the top loser and traded more than 2% down. It was also one of the busiest shares in terms of value.
China's imports in February grew 44.7% from a year earlier on a yuan-denominated basis, accelerating from the previous month and leading to a rare trade deficit for the country. Exports rose 4.2%. Economists said the rise in the value of Chinese imports reflects the recent jump in commodity price inflation, but it also suggests that domestic demand remains resilient.
The strong trade data reinforced a growing view that economic activity in China and globally picked up in the first two months of the year. There are however fears that rising interest rates will put a cap on growth. The US Federal Reserve has a policy meeting on March 14-15 and markets have quickly ratcheted up bets of a rate hike at the meeting, after recent hawkish comments by US policymakers.
By mid-morning the All-share index was only 0.17% higher at 51 464 points, and the Top 40 index was 0.18% stronger at 44 420 points. This was mainly due to the Industrial index - which represents the major dual-listed shares with the big market capitalisation - gaining 0.43% at that stage. The Financial index was also 0.11% firmer. The Resources index was however 0.49% softer.
BHP Billiton was 2.12% softer at R208.13. Before Wednesday’s trade the share was trade already more than 13% lower over the past 30 days, but is still 21% higher for the year.
The two other commodity giants, Anglo American [JSE:AGL] and Glencore [JSE:GLN], were both marginally stronger. Anglo American, which lost more than 15% over the previous 30 days, traded 0.67% stronger at R194.79. Glencore was 0.33% higher at R51.39. The share performed better than the other two and lost only about 6% over the previous 30 days.
The prices of precious metals were lower, with gold losing 1% to $1 212 per ounce while the platinum price was almost 3% softer at $956/oz. Impala Platinum [JSE:IMP] was however resilient and slipped only 0.27% to R41.11. Anglo American Platinum [JSE:AMS] traded 1.75% softer at R280.01.
Most of the big shares in the Industrial index were marginally higher. Naspers [JSE:NPN] was 0.43% up at R2 144.90 but British American Tobacco [JSE:BTI] traded 0.12% softer R807.00. Steinhoff [JSE:SNH] was 0.56% stronger at R63.26.
