South African stocks dawdled in barely positive territory in Monday afternoon trade, with rising precious metals prices cancelling out gains wrought by a firmer rand, dealers said.
Gold stocks came off their earlier highs, but still held onto good gains. Gold Fields was one percent or 145 cents higher at R146,95. It was the top traded stock by deals.
The gold index added 1,56%, outstripping the benchmark all-share index’s 0,30% gain. The value of shares traded was R1,5 billion.
Gold was quoted at 311,50 an ounce, up from $311 at the close of business in New York on Friday.
The price of the precious metal has been supported by dollar weakness, two suicide bombings in Israel and a warning by US Vice President Dick Cheney that a new attack on the nation was ”almost certain”.
But while global uncertainty prompts safe haven buying in bullion and boosts gold stocks, a rise in the platinum price to its firmest level since April 29 had no such impact on domestic stocks in the white metal. Investors took their cues from the firmer rand instead.
The world’s second largest platinum producer Implats gave up two percent or R13,20 to R636.
”When the rand is strong it has a hell of an impact on resources stock. Gold shares are different because it’s been the talk lately, with all the global uncertainty. Investors are making sure they have a bit of a hedge in their portfolios,” said Laurence Lasersohn, director of Appleton Securities.
Resources and dual-listed stocks gain when the rand is weaker, because most earn in foreign currency and pay their costs in rands. The reverse is true when the rand strengthens.
Swiss-based Richemont bucked the trend. It added to its Friday gains, rising 1,8% or 43 cents to R24,70 on hopes that an economic recovery would boost demand for its luxury goods, which include stylish pens and fine jewellery.
But financial stocks took little heart from a generally firmer rand, which hovered just above its key R10,00 to the dollar level after breaking that barrier on Friday — the first time since late November.
”The rand is still looking good, and trying to break through that barrier again. People are waiting on the back of that to see whether they should be getting into financials,” Lasersohn said.
IT firm Dimension Data rose 1.37% or 13 cents to 963 cents, clawing back some lost ground after losing as much as much as 10% on Friday after its Asian unit warned of an annual loss, despite slightly better than expected first-half figures from the parent firm. – Reuters