JSE firm, weaker rand drives miners

A weaker rand drove mining shares higher on the JSE by midday on Thursday, lifting the bourse 0,88% into the black.

By noon, the platinum-mining index was 2,74% higher, while the gold-mining index advanced 2,36% and resources were up 2,04%. Industrials edged up 0,16%, but financials and banks were off 0,66% and 1,24% respectively.

The JSE also ignored local producer price index (PPI) data released shortly before midday, which was in line with market expectations, but investors were waiting to see what the outcome of the South African Reserve Bank’s monetary policy committee (MPC) decision on rates would be later on Thursday.


South Africa’s PPI rose by 10,3% year-on-year (y/y) in December from a 9,1% y/y increase in November. It was expected to be at 10,2% y/y in December.

The rand was bid at 7,41 to the United States dollar from 7,26 when the JSE closed on Wednesday, while gold was quoted at $921,45 a troy ounce from $918,90/oz at the JSE’s last close.

“This market is going higher on a weaker rand, which has been strengthening resource stocks,” said a local trader.

He added that bank and financial stocks were lower because there was a bit of concern over what the MPC’s rate decision would be later during the day.

The Reserve Bank started its two-day MPC meeting on Wednesday, with the interest-rate decision expected at about 3pm on Thursday afternoon.

The consensus forecast among the 14 economists surveyed by I-Net Bridge is for a pause in South Africa’s tightening cycle at 11%.

“I don’t think that they are going to change rates, I think they are going to go flat, but there is talk that an announcement will be made about a change in the policy for the rate, to strip out energy and food inflation and only look at core CPI,” he said, adding that it doesn’t make sense to penalise society with factors that are beyond their control.

“If they change policy, we will see this market rally,” he said.

Among stocks on the JSE, resource group BHP Billiton gained R2,47, or 1,16%, to R214,96, Anglo American advanced R10,07, or 2,59%, to R399,06. Sasol picked up R4,25, or 1,24%, to R348,25 and Kumba Iron Ore collected R11,65, or 4,51%, to R270,15.

Gold miner AngloGold Ashanti improved R9, or 2,92%, to R317 and Harmony added ten cents to R75,10. Gold Fields on Thursday reported an 11% increase in its headline earnings per share for the three months making up the December quarter 2007.

Its share price had lifted R2,75, or 2,48%, to R113,50 by midday.

Platinum mining group Anglo Platinum was R26,47, or 2,58%, better at R1 054,17 and Impala Platinum gained R9, or 3,4%, to R274.

Global pulp and paper producer Sappi on Thursday reported basic earnings per share of 18 US cents for the quarter ended December, up from 13 cents in the December 2006 quarter. However, this was down from the 27 cents reported in the September 2007 quarter. Its share price was up R1, or 1,27%, to R80.

Paper and packaging group Mondi said on Thursday that board approval for the release of €305-million for the investment in a new lightweight recycled container-board machine to be situated at the Swiecie mill in Poland had been obtained. Mondi lifted R1,69, or 2,82%, to R61,69 and Mondi edged up five cents to R54.

Brewer SABMiller fell R3,17, or 1,97%, to R157,40.

Banker Nedbank lost R2,37, or 2,08%, to R111,63 and Standard Bank weakened R1,50, or 1,61%, to R91,50. — I-Net Bridge

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