SOUTH AFRICA’S heavyweight gold shares took centre stage on Tuesday as bullion jumped to its strongest levels in more than two years, but the rest of the market traded sideways weighed by soggy overseas markets.
Investors locked in profits in recently strongly performing bank shares, cancelling earlier gains in the sector and pushing the broader market lower.
Gold touched $313.65 a troy ounce in European trading to reach its strongest level since February 2000, lifting leading South African gold shares to new life highs.
”Gold’s up. That’s where the interest is today. The rest of the market is just following Wall Street, they had quite a heavy knock last night,” said Dave Palmer of Anglorand Securities.
The country’s number two gold producer Gold Fields hurdled to a new life high of R143.60 before paring back to R141.20, 4.6% higher.
Bigger rival AngloGold too, trotted to a new life of R630. It was last traded at R621, 1.8% higher.
Other shares in favour on Tuesday morning were platinum shares, tracking a firmer white metal price. World number one platinum producer Anglo American Platinum trotted up 1.9% to R490.
At 0930 GMT, the broader all-share index dipped 0.2% or 21.6 points to 11,296.5.
Banks have enjoyed favour lately, boosted by a strengthening rand, which has raised hopes of a reduction in inflationary pressures and lower interest rates after two rate hikes this year.
But on Tuesday, they drooped as investors cashed in profits. Sentiment for the sector remained bullish as investors continued to bet on a stronger rand.
Big bank FirstRand slipped as the market digested news it had made an offer to acquire troubled Saambou Bank and would not be working with the government on a public-private partnership as originally thought.
The share dipped 0.12% to 854 cents. Other losers included niche lender Investec which shed 2.2% to R166.
Market bellwether Anglo American Plc eased three percent to R168.40, weighed down by a stronger rand.
Traders said the market had taken a wait and see attitude after Monday’s poor close on Wall Street as the market remained riddled with doubts over the economic recovery and corporate earnings, adding to poor sentiment.
Synthetic fuel producer Sasol shed 0.9% to R117 hurt by softer crude oil prices.
A bright spot on the resources counter was pulp and paper producer Sappi which posted better-than-expected second quarter earnings. The share added 2.5% to R141.40.
Sappi said headline earnings per share — which strip out exceptional items and their tax effects — climbed to $0.26 from $0.14 in the December quarter. A Reuters consensus poll had predicted headline earnings per share (EPS) of $0.22. – Reuters