MOOD IN GLOBAL MARKETS REMAINS UNCERTAIN

February would have been as dismal a month in the markets as January was, were it not for the rebound in resources shares. Mining shares rocketed in the month, way ahead of the increases in commodity prices, prompting many analysts to question the sustainability of the rebound.

The JSE all share ended February marginally up 0.56% after falling 3.06% in January. The Dow Jones industrial average added a monthly 0.30%, but the German Dax lost 3.09%. The MSCI World index shed 0.96%.

The mining rally was led by gold stocks. The gold price rose 11.3% in the month, but the gold index jumped 45.9%. Star performers included AngloGold Ashanti, which firmed 51%, and Sibanye, which gained 62.8%.

Platinums had a more pedestrian month, with the index gaining 18.6% on a 7.5% rise in the metal’s price. But it was a harbinger of better things to come, with the index up 87% in the year to date at mid-March. The high flyers included Anglo American Platinum, which rose 41% in February, and Lonmin, which added 70% that month.

The big mining houses were not going to be left behind. Anglo American doubled its share price from R50 to R103 in February on the extensive restructuring exercise announced by the group in the month. BHP Billiton rose a monthly 4%, but was down 8.8% for the year to end-February.

Financial shares had a negative month. The Financial 15 index retreated 2.8%. Banks were down 1.9% in February, Standard Bank losing 2.6% and Barclays Africa shedding 5.5%. However, market favourite FirstRand added 4.63% in the year to end-February, only to retreat in March on subdued interim results released by the financial group.

Property remained a market stalwart, with the index ending February up 3.34%.

The rand made a recovery of sorts in February. After falling to a record low of R17.7893/$ on January 11, it ended February at R15.88/$. However, the mood in global markets remained uncertain. After the US rate hike in December 2015 markets were bracing themselves for a further four increases in 2016 against an increasingly risky global backdrop, including lower Chinese GDP growth and US deflationary concerns. More stability returned to the markets in March as the US Federal Reserve kept rates on hold and cut the number of further increases to an expected two for 2016. Together with a further stimulus announcement from the European Central Bank, the stage was set for more risk-on trade, which could boost emerging markets during the year.