/ 29 February 2008

Miners keep JSE afloat

Gold-mining stocks and other commodity counters helped keep the JSE’s head above the water by midday on Friday, as metal prices kept driving higher on the back of a weaker United States dollar.

By 12.01pm, the JSE’s broader all-share index was up 0,24%, led by a 1,85% climb in the gold-mining index. Resources were 1,06% firmer, and the platinum-mining index was up 0,66%. Industrials shed 0,12%, financials gave up 1,4% and banks weakened 1,91%.

The rand was bid at 7,620 to the US dollar from 7,53 when the JSE closed on Thursday, while gold broke through its all-time high of $975/oz hit in the early morning session, and reached US$976,13 a troy ounce.

“Gold came under pressure at the start of Thursday as traders in Asia carried out pockets of profit-taking on the back of dollar gains. The yellow metal dipped to $953,15 in early Europe but this proved to be the day’s low as the greenback weakened,” explained London-based metals analyst James Moore, from TheBullionDesk.com.

He added that gold worked back to $960 by the US opening on Thursday and spent some time trading $958 to $962,50 before breaking higher as the dollar extended lower in response to US Federal Reserve Bank Ben Bernanke’s testimony.

Gold touched a high of $967,20 shortly before Wall Street’s close and pushed above $970 in after-market trade, with follow through buying on Friday lifting gold to $975, he said.

“Investment demand for gold and the rest of the precious metals looks set to remain strong in the coming sessions as investors look to off-set rising oil prices and continued dollar weakness,” concluded Moore.

“All resource and mining stocks are benefiting from higher commodity prices that are running on the back of the dollar, which has been weakening further,” an equities trader said.

He explained that local credit extension data and M3 money supply numbers were quite high, which was “worrying the market”.

The rate of growth of South Africa’s broad M3 money supply measure rose by 25,16% in the year to end-January from a revised 23,64% (23,67%) in the year to end-December, the South African Reserve Bank said on Friday.

Credit extension to the private sector (PSCE) grew at a rate of 23% year-on-year (y/y) from a revised 21,57% (21,46%) in December. .

M3 money supply aggregate growth, meanwhile, was expected to have increased in January at 23,9% y/y.

“Interest rate sensitive stocks like banks and retailers are taking a back seat today [Friday] as everyone is scared of the possibility of another interest-rate hike,” he said.

He added that market players must also note that it is year-end on Friday, and that there was “a lot of rebalancing in the market going on”.

On the JSE’s gold-mining index, AngloGold Ashanti shot up R11,07, or 4,15%, to R278,12 and Gold Fields added 33 cents to R108,01.

Among resources, Anglo American edged up 39 cents to R493,39 and BHP Billiton recovered R6,62, or 2,7%, to R251,62.

Platinum miner Anglo Platinum improved R4,74 to R1 204,75 and Impala Platinum increased R1,50 to R311,50.

Brewer SABMiller fell R2,01, or 1.,4%, to R160, while luxury goods group Richemont was up 33 cents to R44,93.

Banker Standard bank declined R1,72, or 1,79%, to R94,27 and Nedbank gave up R2,73, or 2,28%, to R117,17. — I-Net Bridge