OWN CORRESPONDENT, Johannesburg | Thursday
A BOUNCE in banks, coupled with expectations of a rally on Wall Street, joined forces to lead South African stocks to a 2% stronger close on Wednesday – the highest finish in four weeks.
In what analysts called a catch-up after recently underperforming the overall market, banks hurdled 5%, lifting the broader financial index 4.3%.
The bullish mood in the sector, underpinned by sharply higher US futures and later Nasdaq stock prices, lifted the overall market 164.9 points to 8530.8.
Banks account for about 12% of the overall market capitalisation.
It was the all-share index’s highest close since March 14. But the index finished below its late day peak of 8577.4 – or 2.5% up, after the Dow Jones reversed early gains.
US markets open half an hour before Johannesburg closes.
“Banks have been oversold in the past few weeks, and a slight bounce in U.S. and UK financials on Tuesday affected local sentiment,” JP Morgan Chase analyst Jacques Badenhorst said.
He expected more gains ahead for the sector, saying the longer term fundamentals were positive.
The stronger start on Wall Street sparked a late rally across the board, lifting industrials 2.2%.
Investors had been lamenting the lack of interest in South African industrials and financials recently, given the renewed focus on mining stocks. But on Wednesday, the buying was broader-based.
Dealers expected the market would continue to be led by the nose by US bourses, especially as local corporate news was at a low ebb given the Easter and Passover holidays.
Amongst financials, heavyweight Old Mutual added 4.8% to R17.60 in active trade of more than 5.3m shares. Standard Bank Investment Corp gained 4.7% to R30.35 and peer FirstRand leapt 5.8% to 752 cents.
Outside financials, resources stocks also kept to their recently upward path, adding 0.7%. Angloplat jumped 5% to R313 in an extension of its bounce off last week’s five-month lows.
Analysts said the stock was making up some of the sharp losses suffered in the past two months, and was also taking heart from a new deal to jointly develop the Pandora mine with Lonmin Platinum. They forecast more strength ahead.
Market heavyweight Anglo American got pulled along in the positive mood, advancing 100 cents or 0.2% to R483. The stronger US stock futures, and then the 3.8% jump on Nasdaq before Johannesburg closed, boosted local tech leader Dimension Data. It ended 6.5% up at R34.35. On Monday it slid to a new 12-month low of R28.95 – a move dealers said was overdone. – Reuters
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