JSE perks up on mines output data

Miners boosted gains on the JSE as better-than-expected production data in the sector pointed to a recovery after it took a significant hit from the Covid-19 pandemic.

Stats SA figures released on Tuesday showed that mining output had its first annual gain in a year in February, rising 0.8% year on year, after a revised 8.4% (from 6.2%) contraction in January. The median estimate of five analysts polled by Bloomberg was for a contraction of 3%.

Mining output fell for 11 months running starting in March 2020, as the sector struggled to recover from a series of government-ordered lockdowns that shut mines and factories in an attempt to curb the spread of the Covid-19 pandemic.

“SA, which is heavily reliant on the export of its minerals should benefit from a further pick-up in commodity demand, supported by a projected 6% [International Monetary Fund-estimated] increase in global growth this year as the vaccination rollout continues globally,” said Investec economist Lara Hodes.

“Downside risks to global growth do, however, remain, while domestically electricity supply disruptions continue to weigh heavily on the competitiveness of energy-intensive mining houses,” she said.

The JSE all share gained 1.03% to 67,072 points and the top 40 1.17%. Precious metals rose 1.29%, industrials 1.46% and resources 0.97%.

Upbeat trade data from China boosted some global markets on the day with the country seeing a more than 30% jump in exports from a year earlier in dollar terms, adding to signs that the global economic recovery is progressing well.

The data comes as, even though vaccine rollouts across the world continue to pick up pace, there has been an uptick in Covid-19 cases in some Asian countries.

Challenges have also arisen over the safety of certain vaccines.

SA is weighing up whether or not to pause the administration of Johnson & Johnson’s vaccine while its safety is investigated after reports in the US and Europe of rare blood-clotting events that may be associated with the shot.

At 6.15pm, France’s CAC 40 had gained 0.34% and Germany’s DAX 30 0.13%.

At the same time, the rand had strengthened 0.38% to R14.5215/$ and 0.28% to R19.9503/£. The euro was 0.24% firmer at $1.1939.

Gold gained 0.66% to $1,743.92/oz, while platinum lost 0.83% to $1,158.69. Brent crude was 1.06% firmer at $63.12 a barrel.