JSE boosted by miners, ignores CPI

The JSE ignored CPI data that came in slightly higher than market expectations and continued to gather momentum by midday on Wednesday on news that power had been restored to the mining industry.

December CPI came in at 9% year-on-year, while the market expected 8,9%, and CPIX came in at 8,6%, against the expected 8,5%.

By noon, the JSE’s broader all-share index had collected 1,1%, led by a 2,52% advance in the gold mining index.
Resources were up 2,06% and the platinum mining index improved 0,21%. Financials added 0,8%, but banks were off 0,13% and industrials shed 0,03%.

The rand was bid at R7,26 to the dollar, from R7,16 when the JSE closed on Tuesday, while gold was quoted at $920,85 a troy ounce from $923,50/oz at the JSE’s last close.

“The JSE opened slightly lower as it followed Asia and US futures, which were down, but as news came out that power supply had been restored to miners, their shares pushed up—particularly Anglo plc, where we saw a spike, and that pushed the entire market up,” said Lavan Gopaul, a local trader from Cortex Securities.

Late last week, national power utility Eskom told miners that it couldn’t guarantee supply, forcing underground operations to a halt and sending stocks lower on the JSE.

However, on Tuesday it was announced that at least 80% of the supply would be restored, which lifted stocks higher near the JSE’s close.

Resource heavyweight Anglo American confirmed on Wednesday that all of its South African operations had 80% of their electrical power restored. It also welcomed the decision to increase power to the 90% level by the end of this week.

The global resources giant, which has its origins in South Africa, was among the mining groups whose production was hit by South Africa’s power crisis.

By midday, Anglo American’s share price had climbed R10, or 2,72%, to R378.

Gopaul said that when Anglo came out with the statement, this gave a boost to the whole resources sector as well as to other companies that had been affected, such as construction companies.

Stocks such as Murray and Roberts, which was up R1,75, or 2,24%, to R79,75, and Aveng, which was R1,19, or 2,38% higher, at R51,29, were examples of shares that took a liking to the news.

“All eyes will be watching the US Federal Reserve Bank’s rate decision tonight,” he said, adding that if the Fed decided to lower rates, the market would be pleased.

United States players are betting that the Fed will reduce rates by a further 50 basis points to help support the wilting US economy that has been hit by fears of a possible recession. However, the Fed’s rate decision will only be announced after the JSE’s close.

“On the local front, we will be looking at the MPC [monetary policy committee] rate decision tomorrow [Thursday],” said Gopaul.

Market players are looking for a flat line in rates. “Raising rates will only punish this market, we would like to see the MPC go flat on rates because of the problems in the international market,” he explained.

Among other stocks on the JSE, resource group BHP Billiton climbed R4,60, or 2,27%, to R207,60 and Sasol gained R5,97, or 1,8%, to R337.

Gold miner AngloGold Ashanti collected R10,10, or 3,38%, to R309 and Gold Fields advanced R2,99, or 2,79%, to R109,99.

Anglo Platinum edged up 49 cents to R1 019,99 and Impala Platinum improved 75 cents to R257,75.

Brewer SABMiller was down R2,33, or 1,42%, to R162,17 and luxury goods group Richemont retreated 22 cents to R41,37.

Retailer JD Group fell R1,54, or 3,89%, to R38 after it advised on Tuesday that total sale of merchandise for the first four months of trading were 4,8% down on the corresponding period of the previous year.

Financial group Investec Ltd lifted R1,25, or 2,06%, to R61,95, Investec plc increased by R1,22, or 2,06%, to R60,52 and Nedbank was up R1,05 to R112,75.—I-Net Bridge

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