Strong dollar upsets commodity train

South African stocks were on the retreat by noon on Tuesday as a strong dollar upset commodity prices and stocks.

By noon, the all-share index was in the red by 0,79%, with golds down 2,85% and the platinum index down by 1,32%. This contributed to the resources index losing 0,87%. Industrials gave up 0,81%, with banks down 1,5% and financials 0,57%.

The rand was bid at 7,83 to the US dollar from 7,72 when the JSE closed on Monday, while gold was quoted at $808,80 a troy ounce from $822,35/oz
at the JSE’s last close. Platinum was last at $1 416/oz, from $1 427 overnight.

“The euro has depreciated against the dollar and the strong dollar this morning is filtering through to commodity prices, which are weak, and commodity stocks are taking strain,” explained senior dealer from Cortex Securities, Martin Lentsoane.

He added that this needed to be combined with the fact that overseas markets were poor overnight and the trend is continuing on Tuesday.

Dow Jones Newswires reports US stock fell on Monday as nervousness about the condition of mortgage-finance and housing markets kept financial companies under pressure. Used-home sales climbed 3,1% in July, rising more than expected, but inventories hit a record high and prices kept dropping.

Traders are worried that this will crimp financial and corporate activity further.

On the JSE, resource giant Anglo American was down R5,05, or 1,26%, to R394,95, but BHP Billiton managed to eke out R1,25 to R233.

Global resources group Rio Tinto said on Tuesday that rival BHP Billiton’s pre-conditional offer to acquire all the shares in Rio Tinto has now been referred to a second phase review by the EU competition authorities.

“Our boards rejected this offer on the basis that it undervalued the company and its prospects, and we now await the outcome of the EU and other important regulatory reviews,” said Rio Tinto chairperson Paul Skinner.

Synthetic fuels maker Sasol declined R4,85, or 1,18%, to R405,25.

Gold miner AngloGold Ashanti was R6,49, or 3,20%, weaker at R196,51, with Gold Fields off by R158, or 2,35%, to R65,67.

Among platinum miners Anglo Platinum gave up R15, or 1,68%, to R876 and Impala Platinum lost R3,11, or 1,46%, to R209,57.

Liberty International bucked the down trend to lift by R8,90, or 6,84%, to R139. It was reported on Monday by a research house that United States-listed Simon Property Group, the second-largest global retail property trust (after Westfield), had acquired 3,45% of Liberty International. Its market cap is over £10,7-billion, or more than three times Liberty International’s.

Services company Bidvest improved a little from a R1,50 drop in early trade to a fall of 70 cents by noon to R107,20, while construction group Group 5 also improved a tad from a R1,43 loss earlier to a
60 cent loss by noon to R52,85.

Brewer SABMiller was off by just 16 cents to R160,60 and Richemont shed a mere 14 cents to R43. Remgro was down by 86 cents to R184,39.

Mobile carrier MTN lost R3,20, or 2,82%, to R110,25, while Telkom was off R1,66. or 1,23%, to R133,84.

Tiger Brands was R2,38, or 1,87%, weaker at R124,62 after the unbundling dust of Adcock Ingram settled. On Monday, approximately 172,6-million Adcock Ingram ordinary shares were listed on the main board of the JSE in the pharmaceuticals sector. Adcock Ingram’s share price opened at R35 on Monday and was at R34,78 by noon.

Banking group Standard Bank retreated by R1,82, or 2,13%, to R83,50 and Nedbank was in the red by R1,74, or 1,71%, at R100,01. – I-Net Bridge

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Evan Pickworth
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