Johannesburg | Tuesday
SELLING in gold and bank stocks helped South Africa’s bourse extend losses in Tuesday early afternoon trade, as bullion prices retreated and higher-than-anticipated private credit demand figures weighed, traders said.
The gold index fell almost three percent, driving the key all-share index down 0,4% or 38,5 points to 11,035.5 points by 1109 GMT, as investors locked in profits in gold counters following recent sharp gains fuelled by the stronger bullion prices.
”The Wall Street came off last night, and the disappointing private-credit extension data is not helping at all. The figures are pointing to another interest rate hike,” a trader said.
Gold shares led the way lower, shedding 2,6% to 3,060.5 points with companies like AngloGold, and Gold Fields moving off life highs reached on Monday as the bullion price weakened. The stocks hit record highs of R593, and R142 respectively on Monday.
London gold suffered a setback on Tuesday after light profit-taking pushed spot prices back below support at $310, key psychological barrier which was smashed in last week’s safe-haven rally, traders said.
Spot gold was trading at $308.90/oz by 1105 GMT compared with $310.50 in New York late on Monday.
Number two miner Gold Fields dropped 4,4% to R130. South Africa’s largest gold producer AngloGold was unchanged at R586 after posting March quarter results at the lower end of expectations.
The miner’s March quarter headline earnings per share, which strip out exceptional items and their tax effects, were 969 cents compared to 906 cents previously.
Analysts polled by Reuters expected AngloGold, which is seen shackled by its hedge book, to post headline earnings per share of R10,60, with a range of 900 cents to R12,32.
Harmony fell 4,8% to R140 rand.
Banking shares dropped 0,6%, extending their 3,7% fall on Monday as March private credit demand data grew faster than expected, raising fears of another interest rate increase by the Reserve Bank in June.
The Bank has raised interest rates twice this year by one-percentage point each time to quash the inflationary pressures stemming from the rand’s 37 percent slide against the dollar last year.
Traders say another rate rise could squeeze the margins in the banking sector.
The South African Reserve Bank said private sector credit growth rose 13,50% in the year to March against an unrevised 12,54% in February and versus market expectations of 12,50%.
Retail bank Absa receded 1,2% to R32, and Standard Bank fell 0,7% to R34.35.
A slightly softer rand attracted investors to pick up some rand-hedge stocks, which normally benefit when the currency loses ground as a large chunk of their sales are dollar denominated.
Energy firm Sasol a traditional rand-hedge gained 1,4% to R114.60 despite weaker oil prices. The market’s biggest stock Anglo American was flat at R167.40. – Reuters