SA stocks rise to five-week high, rand steady
March 19, 2009
By Zimkhitha Sulelo and Tiisetso Motsoeneng
South African stocks rose to a five-week high on Thursday as gains in global equity markets boosted investor sentiment but the rand reversed its earlier gains as US stocks fell.
Johannesburg's Top-40 index closed 6.4 percent higher at 18 573.44 points, the best level since February 2. The broader All-Share index ended 5.76 percent firmer at 20 470.93 points, breaking above the 20 000 level for the first time since February 16.
"You can call it a buying frenzy. It was sparked by the futures closeout, which happened to be very good in overseas markets," one Johannesburg-based trader said.
The rand was trading at 9.6440 against the dollar at 6pm, not far off its last New York close of 9.65. It strengthened to 9.5450, its firmest level since February 9 but reversed those gains in late trade on lower US stocks.
Commodity stocks led the rally on firmer prices with bourse heavyweight Anglo American up 9.41 percent to R158.53. Rival BHP Billiton jumped 9.38 percent to R194.78.
Gold mining company AngloGold Ashanti surged 8.26 percent to R356.03. It said it expected Colombian authorities to give a green light to resume drilling the stalled La Colosa project by June 2009.
Rivals Gold Fields added 6.29 percent to R119.05 and Harmony rose 6.33 percent to R113.09 as the price of bullion jumped to a near three-week high.
Elsewhere, Investec gained 5.64 percent to R34.20 partly on relief that there were no negative surprises in its investor briefing after forecasting drop of up to 30 percent in adjusted headline earnings per share.
South Africa's government bonds were mixed. The yield on the 2015 issue was down 7 basis points to 7.775 percent while that on the long-dated 2036 paper rose 3.5 basis points to 8.11 percent.
Bonds were firm across the curve earlier in the session.
"After the announcement of switch auction the curving normalised and we saw some selling in the long end," said a bond trader."
The government said it would hold a switch auction for its 2010 bond on March 26 with three destination bonds, the 2014 bond, 2021 issue and 2026 paper.
The central bank's Monetary Policy Committee will meet next week and is expected to cut the repo rate by at least 100 basis points to 9.5 percent on Tuesday. Rates are seen falling sharply as inflation slows and the economy stumbles towards a recession.
The MPC has cut interest rates by 150 basis points since December 2008 after raising them by 500 basis points between June 2006 and June 2008. - Reuters
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