JOHANNESBURG - Firms stockpiling on precious metals and minerals as well as growing expectations of China injecting a stimulus package to ease the industrial effects of the coronavirus outbreak put investor sentiment on an about-turn that helped local stocks rally sharply from the Tuesday losses after foreigners sold $4.45billion (R66.85bn) worth of shares, leading to the biggest net outflow since November.
Mining stocks benefited from the market’s largesse with Impala gaining 4.46percent to R170.90, AngloGold 5.24percent to R31.49, Gold Fields 9.57percent to R10.60 and DRDGold 6.06percent to R10.50.
Platinum miners also inched up, with Amplats leading the rally 6.72percent to R139.56, while Northam inched up 7.93percent to R148.82, Harmony 9.28percent to R53.45, Royal Bafokeng 6.05percent to R59.81, and African Rainbow Minerals 2.28percent to R168.50.
Analysts said the upswing was as a result of the sharp turn in gold which broke the $1600 (R24 037) an ounce barrier, and palladium prices were up 6percent to $2785 an ounce, which saw both sub indexes rise to the highest level in nine years.
The sub index of gold producers was up 4.4percent to the highest level since December 2011, while the sub-index for platinum producers rose 5.9percent to the highest since April 2011
Palladium and rhodium prices, widely used in vehicle exhausts to reduce harmful emissions, have climbed as tighter environmental regulations force carmakers to buy more of the precious metals.
FXTM Market Analyst Han Tan said Covid-19 was set to frame the market action and policymakers’ reactions around the world over the near-term.
“The global economic outlook remains mired in uncertainty at this point in time, with coronavirus-related warnings emanating out of corporate America, the Eurozone economy, and Asian governments. In the interim, Asian currencies are expected to hold a bias for more softness so as to help ease some of the pressures off the respective economies,” he said.
Standard Bank rose 0.8percent to R167.64, FirstRand 0.73percent to R62.20, Absa 0.89percent to R146.64, and Nedbank 0.61percent to R146.64.
The JSE Top40 index rose 0.33percent to 52092.14 points from Tuesday’s 0.83percent loss to 51922 points, while the broader all-share index gained 0.27percent to 57868.12 points, shaking off Tuesday’s 0.81percent loss to 57714 points.
Tan said the rally in gold prices and investors’ increase of exposure to safe haven assets amid swirling concerns over the Covid-19 outbreak “shows more headroom for bullion before it breaks into overbought territory, which could see bullion bulls testing the $1610 handle as long as markets persist with the risk-off mode.”
The gauge of mining stocks advanced 1.5percent to the highest in four weeks as gold and platinum producers climbed to multi-year peaks.
“There is a lot of stock market money looking for a safe haven and finding it in gold. One keeps thinking there must be a top somewhere, but I don’t think we have found it yet,” said David Govett, head of precious metals trading at Marex Spectron Group in London.
Additional reporting by Bloomberg.