SOUTH AFRICA’S bullion and bank stocks bubbled up in morning trade on Monday as dollar weakness kicked the metal price higher and drove the rand to fresh five-month peaks, traders said.
But volumes were thin, with UK and Japanese markets closed for public holidays.
”Once again, the market’s direction is being driven by the currency,” said Julian Henry, trader at Barnard Jacobs Mellet.
”I think that has sparked a run in financials and people are becoming quite bullish,” he added.
The rand rushed to a fresh five-month high of 10.35 on Monday as sentiment towards the dollar remained poor following a grim unemployment report on Friday.
Bank shares are benefiting from the latest rand strength as investors anticipate an easing in inflationary pressures and look forward to lower interest rates in the longer-term following two rate hikes so far this year.
Their gains helped push the broader market to 11,201.2, up 55.4 points or 0.5 percent.
Standard Bank, the country’s biggest bank by market value, bounced to 37.20 rand, up 1.6 percent. Absa enjoyed a 3.3 percent gain, taking it to 34.40 rand and Nedcor zoomed 3.4 percent higher to 153 rand.
Nedcor’s gains have pushed the value of its offer for number six bank BoE to 3.54 rand from the original 3.43 rand per share basic cash-and-paper offer announced last Monday.
BoE was trading at 3.54 rand.
Number two bank FirstRand climbed 1.8 percent to 8.55 rand as the market evaluated its Friday announcement that the National Treasury had given its approval in principle to a deal over a rescue package to save Saambou.
Saambou’s shares have been suspended since February.
Gold Fields grabbed a 1.6 percent gain to reach 130.80 rand, but the country’s number one bullion producer AngloGold was flat at 609 rand after the precious metal shot above $313 an ounce from around $310 after the Johannesburg stock market closed on Friday.
It was trading at around $311.30 by 0919 GMT.
Unhedged Harmony, among the country’s best-exposed producers to movements in the spot gold price, added 1.1 percent to reach 146 rand.
The rand strength also helped lift rand-hedge stocks Sappi and Sasol. Pulp and paper group Sappi logged a 1.5 percent gain at 137 rand and synthetic fuel firm Sasol fired 0.7 percent higher to 117.20 rand, helped by stronger oil prices.
Retail JD Group was smacked seven percent lower to 15.60 rand after reporting disappointing interim results. The group said headline earnings per share fell 37 percent compared to the same period a year before because of tough market conditions in the durable goods credit retail sector.
But traders said they expected thin volume throughout the day as UK and Japanese stocks markets were closed for a public holiday. – Reuters