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Johannesburg - A strong rally by the rand put a damper on the JSE on Thursday morning, with most indices only marginally higher in line with stronger global markets. The rand traded at the highest level in a week at R13.18 to the dollar mid-morning, almost 1% stronger than the day before.
The only exception was the Gold index which gained more than 4% in early trade after a strong turnaround by the gold price. This followed the dollar's loss of momentum on news that Federal Reserve policymakers appeared increasingly wary about recent weak inflation, and that some had called for halting interest rate hikes until the trend became clearer.
The rand rally is also the result of the weaker dollar, as well as indicators that the local economy is showing signs of a turnaround. Recent data showed South African retail sales rose 2.9% year-on-year in June. Together with trade surpluses for the last five months and a narrowing current account deficit, the short-term outlook for the rand is positive, economists said.
The dollar’s fallback
started on Wednesday after the minutes of the Fed's last policy meeting
were released. Last month's meeting, which concluded with a unanimous decision
to leave rates unchanged, was marked by a lengthy discussion about recent
soft inflation readings which are cause for concern.
The strong rand is however not good news for dual-listed shares, which earn most of their income abroad in foreign currencies which are worth less in rand if the unit is strong.
As a result, the All-share index was only 0.04% higher at 55 559 points at mid-morning, while the Top 40 index traded 0.04% softer
at 49 193 points.
The Industrial index, which includes many dual-listed
shares, gained only 0.02% and the Financial index was 0.20% lower. The Resources index gained only 0.36%, despite higher metal prices after a strong
report on Chinese construction, and a sharp rebound in precious
metal prices.
The Gold index was however 3.57% higher after the gold price gained 1.2% to $1 286.72 per fine ounce, and some gold
companies reported strong results.
Harmony [JSE:HAR] traded 4.29% higher at R23.85 after the company reported a 35% rise in full-year profit on Thursday, helped by steady year-on-year production and gains from rand gold hedges that lifted revenue. The share gained more than 4% over the past seven days, but is still more than 36% softer over the previous 30 days.
AngloGold Ashanti [JSE:ANG] was 3.59% stronger at R133.79 and Sibanye Gold [JSE:SGL] gained 2.43% to R18.95. Sibanye said on Thursday it would set aside R1.1bn for a possible settlement with miners who contracted lung diseases at work. A class action suit, mostly relating to the fatal lung disease silicosis, was filed on behalf of miners in 2012.
Gold Fields [JSE:GFI] traded 5.96% higher despite news that first-half normalised earnings dropped 25% due to stronger exchange rates in South Africa and Australia. Gold Fields pays costs in rand and Australian dollars and receives revenue in US dollars.
The company, which also operates in Ghana and Peru, declared an interim dividend of 40 South African cents per share, representing a 20% decline on last year’s first-half payout.
The platinum price gained 2.39% to $974 and palladium 3.06% to $922. Anglo American Platinum [JSE:AMS] added 12.95% to $327.29. Impala Platinum [JSE:IMP] was 2.43% higher at R38.33.
Anglo American [JSE:AGL] was 0.32% lower at R218.31 and BHP [JSE:BIL] lost 0.16% to R232.43.
Naspers [JSE:NPN], which gained almost 3% on Wednesday after Tencent beat forecasts to report its best-ever quarterly results, was 0.04% softer at R2 886.00. Tencent, which ascribed its good results to higher income from smartphone games, payments and online advertising, traded 1.92% higher at $HK329.40 in Hong Kong, just below its all-time high of $HK330.40.
Standard Bank [JSE:SBK] lost 0.44% to R163.15 despite an 11% rise in half-year profit on Thursday, as a rebound in commodity prices boosted demand for loans from clients in the oil and mining industry.
Headline earnings per share totalled 746.4 cents in the six months to June, compared with 671.2 cents a year earlier.
