/ 30 March 2011

SA’s stocks snap losses, govt bonds weaken

South African blue-chip stocks closed around 1,2% higher on Tuesday as telecoms, mining and banking shares rebounded.

The rand held steady against the dollar but government bonds retreated, giving up earlier gains after a well-supported weekly auction and as the market prices in higher domestic interest rates towards the end of the year due to rising inflation pressure.

The JSE Top-40 index of blue chips rose 1,22% to R28 610,18, reversing two days of losses, while the broader All-share index gained 1,09% to R31 718,01.

The rand traded 0,19% firmer at R6,8621 against the greenback at 4.20pm GMT compared with Monday’s close at R6,8750.

“It’s in quite a tight range, basically trading between R6,85/95. We’re really just seeing a little bit of support from equities which is helping the rand slightly,” said Nedbank trader Brigid Taylor.

“The rand has been a bit protected by the export market above R6,90 but once that starts to subside we should start to see it back at about R7,00 if not slightly higher. Our bond market is also under a little bit of pressure,” Taylor added.

Increases
The yield on the benchmark 2015 note climbed 6,5 basis points to 7,825% while that on the longer-dated 2026 note added six basis points to 8,995%.

Government bonds reversed earlier gains after a weekly bond auction at which the Treasury sold R800-million worth of the 2018 note at a bid-to-cover ratio of 2,34 and R1,3-billion worth of the 2021 paper at a bid-to-cover ratio of 2,91.

On the bourse, Africa’s largest mobile phone group MTN reversed Monday’s losses to close at R136, up 3,67% on the day and making it the biggest gainer among blue-chips.

Harmony Gold gained 2,74% to R99,61 after the miner said it had cut costs at its Hidden Valley mine in Papua New Guinea.

Gold Fields increased 2,55% to R117,25 and platinum producer Lonmin rose 1,66% to R186,20.

In financials, Nedbank was up 1,99% to R139,11 and Standard Bank rose 2,57% to R102,36. — Reuters