Johannesburg - More support over the weekend for Finance Minister Pravin Gordhan gave market sentiment in South Africa a big boost on Monday, with share prices and the rand much stronger in early trade.
Support is streaming in for Gordhan, who is facing fraud charges early next month in connection with the early retirement of a senior official at the South African Revenue Service. Legal groups applied to the high court to put the charges- regarded by legal experts as unfounded and frivolous - aside and most of the country’s top businessmen as well as Deputy President Cyril Ramapahosa have expressed their support for Gordhan.
At mid-morning the rand was trading almost 0.40% higher at R13.89 to the dollar, despite the greenback reaching the highest level in nine months against a basket of major currencies. A strong rand is normally negative for the big rand hedge shares which earn most of their income abroad, but it did not have any influence on Monday morning.
The Industrial index, which includes most of the big dual-listed stocks which are also listed on European markets, followed the European markets higher. Share prices were however drifting lower towards midday.
Markets are waiting with trepidation for Wednesday’s mid-term budget, which could have a major influence on international credit rating agencies' decision on South Africa’s future credit status.
By mid-morning the All-share index, which was almost 1% up in early trade, traded 0.43% higher at 51 852 points. The Top 40 index was 0.51% firmer at 45 299 points.
The best performer was the Financial index which gained 0.80% in morning trade, while the Industrial index was 0.58% higher.
The stronger dollar eventually took its toll on the resources sector which was 0.42% lower by mid-morning, after gaining more than 1% in early trade. The Gold index lost 2.71%.
The dollar received a boost last week as the euro slid after the European Central Bank put a damper on speculation that it was contemplating tapering its monetary easing.
The dollar was also supported by hawkish comments from Federal Reserve officials over the weekend and higher expectations that Hillary Clinton will win the US presidential election, increasing expectations that the Fed will raise rates in December.
Barclays Africa [JSE:BGA] was one of the star performers in the banking sector, firming 2.30% to R154.05, while FirstRand [JSE:FSR] gained 1.48% and Standard Bank [JSE:SBK] 1.37% to R140.91. Capitec [JSE:CPI] was at one stage more than 1.5% higher on a new 52-week high of R682.00 but lost momentum later on, and at midmorning was only 0.56% higher at R676.77.
The gains among insurance shares were more modest, and Sanlam [JSE:SLM] firmed 0.79% to R65.33 while Old Mutual [JSE:OML] traded 0.53% higher at R34.18.
Anglo American [JSE:AGL] in the resources sector was almost 2% higher in early trade on a new 52-week high of R191.70, but the share changed direction and at midday was 0.22% softer at R186.61. Before Monday’s volatile trade the stock was 18.9% higher over the previous 30 days and 36.4% over the last 90 days.
BHP Billiton [JSE:BIL] at mid-morning was still 1.12% higher at R210.80 while Glencore [JSE:GLN] gained 0.86% to trade at another 52-week high of R41.00. The share price was more than 1% stronger in early trade at R41.94 and has already gained more than 17% over the past 30 days, as the company is making good process with its programme to drastically reduce debt.
Impala Platinum [JSE:IMP] lost 1.90% to R53.14, despite a higher platinum price. Platinum traded 0.86% firmer at R937.60 after losing more than 11% over the previous thirty days.
British American Tobacco (BAT) [JSE:BTI], which gained sharply on Friday on news that it wants to take full control of the US cigarette giant Reynolds American, lost 3.86% on Monday morning to R377.80 on some profit-taking. Reinet [JSE:REN], whose portfolio consists mainly of shares in BAT, lost 2.73% to R27.47.