The JSE eked out a 0.07% gain at the end of the trading day to hold onto its record position above 76,000 points as commodities staged a massive rally and Naspers and Prosus received a healthy boost courtesy of a cut in Chinese rates. There has also been a massive demand for local equities from foreigners, which boosted the rand.
Lower interest rates often benefit tech shares and investor optimism toward Chinese stocks have been rising as the central bank vowed further steps to stabilise the economy battered by Covid-19 outbreaks and property sector slowdown, even as the rest of the world is preparing for interest rate hikes to cool inflation.
Bloomberg reports Beijing’s determination to support growth is boosting expectations that a bottom has been reached for beaten-down Chinese stocks, with an increasing number of analysts seeing more rate cuts and calling for double-digit gains in equities. Chinese tech giant Tencent, in which Naspers holds a 29% stake through its subsidiary Prosus, led the tech gains in China with a 6.60% jump, boosting the JSE heavies 5.08% and 3.75% respectively. Bytes Technology firmed 4.92%, while Cartrack owner Karooo took a 4.18% hit on profit-taking.
On the commodity front, tin producer Alphamin jumped 14.29% as the rally in base metals intensified, with tin logging a fresh record and nickel reaching $24,000 a ton for the first time in more than a decade on China’s monetary easing and global supply snarls. BusinessLive reports Alphamin, a tin miner in the Democratic Republic of Congo now has a market cap of almost R22.5bn, thanks to a 300% gallop in its share price over the past 12 months. “That’s remarkable, considering its position in 2020 when CEO Maritz Smith was praying for a higher tin price so the company could keep its Bisie mine going,” the report reads.
A 1.53% gain in the gold price to $1,846 gave Harmony (+9.10%), Gold Fields (+8.28%), Anglogold (8.09%) and DRDGold (+6.33%) a solid push as the yellow metal also started to respond to high levels of inflation around the world.
PGMs also rallied as platinum and palladium continued their climb, both up over 2.5% on the day, last trading at $1,053.42 and $2,062.26 a troy ounce.
Among the top PGM gainers were Eastplats (+17.69%), Northam (+3.04%), Angloplat (+2.16%) and African Rainbow Minerals (+1.21%). Glencore bucked the trend with a 2.79% drop.
Brent Crude was the odd-commodity out, slipping slightly but still holding steady just above $88 a barrel. Sasol (-0.82%) slipped in tandem.
On the downside, Woolies dipped 1.60% after the clothing, household goods and food retailer warned that its headline earnings will be between 30% and 40% lower for the 26 weeks to 26 December, compared to the same period in the previous year.
Textainer (-4.30%) and Barloworld (-3.80%) were also among the losers.
On the forex front, the rand seemed unstoppable after it broke below the R15.30-level against the dollar. The local currency, the leader by some stretch among the emerging market currencies, was last trading at R15.10/$. “This is a rand move as the US dollar hardly moved today, and from what we’ve been picking up, there has been a massive demand for local equities from foreigners. This has led to a demand for rands, which has forced the currency stronger,” comments TreasuryONE.
According to the forex trading house, the rand move has also caused other EMs to follow suit. “With the rand breaking significant resistance levels, it does not seem far-fetched that the unit could test R15.00 in the short term,” says TreasuryONE.
It reckons risk-taking is happening again in the US equity space, with both the Dow Jones and S&P 500 trading 1% higher in early morning trade. “The saying goes that the trend is your friend, and it is hard to bet against currently, but how much more can the elastic stretch?”
Indicators as at 17:00
Source: TreasuryONE
