The strong rand pulled the rug up from under the JSE Securities Exchange South Africa (JSE) on Wednesday morning, sending stocks tumbling, with those at the top end of the market being hardest hit. While gold and platinum counters were boosted by higher precious metals prices, the rampant currency severely pared their gains.
At 11.38am, the all-share and all-share industrial indices were 1,21% and 1,07% weaker respectively. Resources retreated 1,39%. Financials fell 1,03% and the banks index eased 0,74%. The gold mining index ticked up 0,5% and the platinum mining index was up 0,66%.
The rand was trading at R6,57 per dollar from R6,67 when the JSE closed on Tuesday, while gold was quoted at $397,65 an ounce from $394,55/oz at the JSE’s last close.
“The market has gone belly up. The dollar took a huge whack against the euro last night and the rand has gone even stronger …” a dealer said.
In addition to dollar weakness, the rand was boosted by high precious metals prices and strength in the commodity dollar bloc currencies.
The dealer attributed the dollar’s sharp fall to a United States government report that showed that net foreign purchases of US securities had fallen to a net $4,19-billion in September from $49,9-billion in August. This suggested that the US would have trouble funding its current account deficit.
“Gold shares have started picking up on the back of demand for gold and we are also seeing some demand for AngloPlat and Impala, but the rand is severely capping gains. These shares would be sky high were it not for the situation with the currency,” the dealer concluded.
AngloGold added 1,13% or R3,33 to trade at R297, while Gold Fields and Harmony were flat.
Durban Roodepoort Deep, which was under pressure on Tuesday, bounced 5,07% or 88 cents to R18,25.
AngloPlat advanced two rand to R280 and Impala inched up four rand to R605.
However, the rest of the resources market was under severe pressure.
London-listed diversified resources group Anglo American fell 2,21% or R2,95 to R136,15, BHP Billiton slumped 2,27% or R1,14 to R49,10 and synthetic fuels group Sasol slipped 2,47% or R2,15 to R84,75.
Swiss-listed luxury goods group Richemont led industrials lower and was 2,46% or 39 cents in the red at R15,46.
London-listed beverages group SABMiller weakened 1,03% or 64 cents to R61,40, while pulp and paper producer Sappi shed 1,45% or R1,26 to R85,75.
Sappi’s intraday low of R85,45 was its weakest in two years.
On the financial front, London-listed Old Mutual plunged 3,13% or 35 cents to R10,84. Its subsidiary Nedcor was 2,48% or R1,69 softer at R66,51.
Nedcor has been under severe pressure since it said in a trading update on Monday that core earnings for the second half of the year to December 31 2003 would be materially lower than analysts’ forecasts.
Sanlam, South Africa’s second largest financial services group, was down 1,41% or 12 cents at R8,40. — I-Net Bridge