ALISTER BULL and SARAH BULLEN | Thursday 4.45pm
LOCAL markets stumbled on Thursday, apparent victims of the country’s own success, as a buoyant gold price and upbeat fundamentals perversely dimmed their immediate outlook.
At close of trade the all share index was down 1,32% — with the all gold index down 0,29% despite bullion pouncing back over the $300 an ounce mark. Most of the major gold stocks, however, recorded gains on the day. At 4.30pm bullion was trading at $312,20 an ounce.
But the news that drove the metal higher — AngloGold’s decision to prune its hedge book — ambushed the currency because it implies hefty sales of both rand and government bonds as forward gold sales are unwound. By 4.30pm the rand was trading at R6,34 to the dollar.
AngloGold’s announcement that it will lower its hedge cover supported a sharp gain on the gold price, a longer-term bonus for South Africa which generates a fifth of its foreign exchange earnings from bullion exports.
But the decision, which follows similar moves by other big producers, is a short-term dampener on bonds and the rand because it involves selling of both, and the news briefly forced the rand to its weakest levels of the year of R6,37 to the dollar. The benchmark R150 bond softened to a 12,89% yield.
Both the financial and industrial boards dropped on the day, losing 1,25% and 1,56% respectively. Nail, Fedsure, South African Breweries and Richemont were amoung the day’s biggest losers. On international markets, Japan’s Nikkei Dow fell ahead of its long weekend while Hong Kong’s Hang Seng finished 0,15% higher.