JSE up on global sentiment

File picture: Alex Grimm

File picture: Alex Grimm

Published Jul 7, 2011

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The JSE moved up half a percent at its opening on Thursday, tracking stronger markets abroad.

A local dealer said that the local bourse would focus on a slew of economic data out of the US and Europe, in particular the ADP employment report out of the US later.

By 09:11 local time, the JSE all-share index added 0.53%, with banks picking up 0.66% and financials gaining 0.40%. Industrials gained 0.52%. Platinum miners firmed 0.38%, gold miners profited 0.55% and resources advanced 0.59%.

The rand was bid at 6.69 to the dollar, from 6.73 to the dollar at the JSE's close on Wednesday. Gold was quoted at US$1,531.97 a troy ounce from US$1,528.61/oz at the JSE's previous close, while platinum was at $1,728/oz, from $1,737/oz previously.

“I am rather surprised by the stronger start today, given the negative data out on Tuesday,” a dealer said in reference to China raising interest rates and Portugal's downgrade. Market sentiment however, revealed positive signs ahead of key US jobs data, expected out later in the day. “The ADP employment data will be key for markets,” the dealer said.

Dow Jones Newswires reported that Asian stock markets were mostly higher on Thursday as China's markets remained resilient after the country's central bank hiked rates on Wednesday, while utilities weighed Tokyo after the government sought additional tests before restarting the country's nuclear plants.

Japan's Nikkei Stock Average closed down 0.1%, South Korea's Kospi Composite rose 0.4%. Hong Kong's Hang Seng Index added 0.4%, while China's Shanghai Composite rose 0.2%.

As was widely expected, the People's Bank of China said on Wednesday it would raise its benchmark deposit and lending rates by 25 basis points, marking the third rate hike this year as the government continues to battle high inflation.

“The rate hikes China has delivered, including Wednesday's, have been an appropriate response to the pick-up in inflation over the past 12 months, and that by making these moves, policy-makers have reduced the risk that they will need to 'slam on the brakes' with very aggressive rate hikes later,” RBC Capital markets said in a note to clients.

European stocks were expected to open higher on Thursday, taking their cue from a positive US session, as investors await interest rate decisions by the Bank of England and European Central Bank (ECB), as well as a raft of key data releases.

The Bank of England is widely expected to keep rates on hold at 0.5%, while the ECB is expected to raise rates by 25 basis points, to 1.5%.

With expectations for an ECB hike largely priced in, the spotlight will fall on Jean-Claude Trichet's press conference at 12:30 GMT. Traders will be scrutinising Trichet's tone and looking for any clues on future policy or comments regarding Standard & Poor's view that a rollover of Greek debt would constitute a “selective default”. Market participants expect Trichet's commentary to be less hawkish in light of recent problems in the periphery and the slowdown in economic growth.

“Given the current economic scenario, Trichet might emphasise the increasing level of uncertainty and risks of spillover effects,” said Newedge.

In the US, all eyes would be on the ADP employment report at 12:15 GMT, which was generally considered a precursor to Friday's all-important nonfarm payrolls.

Also on Thursday's economic calendar, UK and German industrial production were at 08:30 GMT and 10:00 GMT, respectively, and US initial jobless claims are at 12:30 GMT.

On the JSE, Anglo American (AGL) added 2.01 rand to 338 rand and BHP Billiton (BIL) garnered 1.26 rand to 267 rand, with Sasol (SOL) 3.48 rand higher to 362.46 rand.

Gold miner Harmony (HAR) gained 81 cents to 89 rand.

Platinum producer Amplats (AMS) found 4.40 rand to 630.40 rand.

Kumba Iron Ore (KIO) surged eight rand or 1.64% to 497 rand. The group said on Thursday that headline earnings and basic earnings for the six-month period to June 30 are likely to be between 8.6 billion rand and 9.2 billion rand, with headline earnings per share (HEPS) and earnings per share (EPS) of between 26.80 rand and 28.70 rand.

Headline earnings and basic earnings reported in respect of the results for the six months ended June 30 (the comparative period) were 6.492 billion rand and 6.489 billion rand respectively while HEPS and EPS reported for the comparative period were 20.28 rand and 20.27 rand respectively.

Diversified miner Exxaro (EXX) pocketed 1.37 rand to 183.05 rand, and African Rainbow (ARI) added 1.41 rand to 193 rand.

Elsewhere, base metals Assore (ASR) picked up 4.15 rand or 1.84% to 230 rand.

Industrials group TigerBrands (TBS) improved by 2.99 rand or 1.5% to 202.99 rand.

Construction firm Group Five (GRF) firmed 85 cents or 2.83% to 30.88 rand.

Sugar group Illovo (ILV) profited 65 cents or 2.49% to 26.75 rand.

Retailer Woolworths (WHL) moved 35 cents or 1.16% higher to 30.57 rand, with Truworths (TRU) was up 1.06 rand or 1.44% to 74.42 rand. Mr Price (MPC) gained 1.05 rand or 1.54% to 69.40 rand.

Massmart Holdings (MSM) was little changed, up 18 cents to 145.68 rand. The group said on Thursday that for the 52 weeks to June 27, total sales increased to 53 billion rand - growth of 11.7% over the prior period - and comparable store sales grew 5.2%.

Massdiscounters' sales for the period increased by 9.4% with comparable store sales up 3.7%, Massbuild's sales increased by 14.1% with comparable sales up 7.2% and Masscash's sales were up 13.1% with comparable sales up 4.1%. Makro increased by 10.5% with comparable sales up 6.9%.

Massmart's reviewed preliminary results for the financial year to June 27 2010 will be published on Thursday, August 26 2010.

Media group Naspers (NPN) grew 2.73 rand to 380.73 rand. - I-Net Bridge

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