The resources-rich South African bourse dropped more than one percent in early trade on Wednesday, dragged down by weaker global markets, but gold stocks capped further losses thanks to a firmer bullion price.
At 0809 GMT, the key all-share index had fallen 1,09%or 106,43 points to 9,638.72 points — tracking the negative reaction of the offshore markets sparked by a surprise drop in US industrial output.
But gold stocks such as Harmony Gold and Gold Fields — who all came under selling pressure on Tuesday due to a weaker bullion price — posted gains and pushed the gold mining index more than one percent higher.
”We are taking our cue from the US and the US is not looking too strong, but we are going to get support from the gold stocks,” said Morgan Sizer, a trader at SCMB Securities.
”Our market has been plagued by global weakness and we are just seeing persistently negative US economic data,” he added.
Oil and gold stocks, who have been gaining sharply recently on fears of a US attack on Iraq, fell on Tuesday following a decision by Iraq to allow UN weapons inspectors into the country.
Gold Fields climbed 1,7% to R146,40, and Harmony gained 1,1% to R177, while the country’s largest gold miner AngloGold added 0.2% to R587.
Spot gold was trading at $318,20 an ounce by 0811 GMT, compared with Tuesday’s New York close of $317,00/7,50 and London’s late fix at $315,90.
Mining giant Anglo American dropped 1,9% to R129,50 on concerns of that the US weak economy will hurt its earnings.
Multi-manager Investment Solutions jumped 19,4% to 584 cents after parent company Alexander Forbes offered to buy out minority shareholders. The stock earlier hit a year peak of 590 cents, surpassing a previous year high of 542 cents reached in May. – Reuters