Commodity conglomerates hit new highs but rest of JSE subdued

Johannesburg - The top JSE-listed commodity conglomerates all traded at 52-week highs on Tuesday, as dollar woes continued to support the prices of industrial metals such as copper and iron ore.

By Tuesday mid-morning Anglo American [JSE:AGL], BHP Billiton [JSE:BIL], Glencore [JSE:GLN] and African Rainbow Minerals [JSE:ARI] were all substantially up on new highs, helping the Resources index on the JSE gain 1.94% and at one stage become more than 2% stronger.

The strong showing by the resources sector was enough to boost the All-share index 0.42% higher to 53 262 points, while the Top 40 index was 0.39%  stronger at 46 418 points.

The rest of the market was however far more subdued, with the Financial index trading 0.20% lower. The Industrial index, which includes most of the dual-listed heavyweights, was hampered by the firm rand which strengthened more than 1% overnight to R13.45 in response to the weak dollar.

By mid-morning the Industrial index was 0.11% softer, with major players such as Naspers [JSE:NPN], Richemont [JSE:CFR] and British American Tobacco [JSE:BTI] all marginally lower.

Sentiment took an early knock when US Treasury Secretary nominee Steven Mnuchin told senators that he would work to combat currency manipulation, but would not give a clear answer on whether he views China as manipulating its yuan. He also reportedly said an excessively strong dollar could be negative in the short term.

On Monday President Donald Trump signed an executive order to formally withdraw the United States from the Trans-Pacific Partnership trade deal on Monday. The TPP accord, backed heavily by US business, was negotiated by former Democratic president Barack Obama's administration but never approved by Congress.

"We're going to stop the ridiculous trade deals that have taken everybody out of our country and taken companies out of our country," the Republican president said.

It seems Trump’s administration prefers to concentrate on protectionism ahead of the fiscal stimulus, which was heavily discounted by the markets before his inauguration.

At 36 232 points, the Resources index at mid-morning was more than 38% higher than the level of 26 023 points reached exactly a year ago.

The sector is more than 8.5% higher over the past month and has gained more than 14% over the past 90 days.

Strong growth in the resources sector is mainly driven by the big conglomerates, most of which are also listed in London, with Anglo American gaining 46.9% over the past 90 days and a massive 312% over the past year.

Local group African Rainbow Minerals is 35.7% firmer over the past 90 days and 157% up over the past year. Glencore was particularly strong over the past 90 days, gaining 56.7%, and it is now 184% higher than a year ago.

BHP Billiton is only 62.3% up over the past year but also performed strongly over the past 90 days, gaining 31.7%.

In Tuesday morning’s trade Anglo American was 3.92% higher on a new high of R232.13, and African Rainbow Minerals was 2.37% stronger at R152.89. BHP Billiton was back above R250, lifting 2.81% to trade at R250.83. Glencore was 1.60% higher at R55.09.

South32 [JSE:S32] lost 7% over the past week and 12% over the past month, but was 5.50% higher at R27.79 on Tuesday. The share price is 134% higher than a year ago.

The most spectacular growth in the resources sector was achieved by companies with interests in iron ore, with Kumba [JSE:KIO] gaining an unbelievable 470% over the past year. The share took a breather over the past month but is still 37.8% higher over the past 90 days. On Tuesday it traded 4.13% higher at R172.79.

The share price of Assore [JSE:ASR], the second biggest iron producer, saw 78.03% growth over the past 90 days and is 206.9% higher for the year. On Tuesday it added 2.78% to trade at R271.35.

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