SA markets hold up well in April

SOUTH African markets have finished another volatile month broadly positive, with resource stocks and the rand topping the winners’ board.

The JSE Resource 10 index bagged a hefty 12% in April, leaving the erstwhile market darlings such as industrial and financial stocks in the dust.

Anglo American led the Top 40 index with a 37% leap in its share price, a gain of about R60-billion in market value. Lonmin jumped 43% to R40 in April from R18.10 at the start of the year.

The chief catalyst for the increase in share values of these mining companies in April, and indeed this year, has been a weaker dollar, which supported commodity prices. The platinum price has rallied 18% to $1 075.17/oz this year while gold has lifted 19% to $1 288.39/oz.

“The recent rebounds in many commodity prices have been stronger than we had anticipated and may be premature,” Capital Economics analysts said in a note.

“We would not therefore be surprised — or that worried — to see some temporary pullbacks in the coming months, notably for oil, perhaps triggered by the resumption of interest rate hikes in the US.”

The dollar suffered another blow this week after disappointing US data, which dampened prospects of a rise in lending rates in the US this year.

US GDP grew at an annual pace of 0.5% in the three months to March‚ against market expectations of 0.7%, data showed this week.

The soft US data helped the rand to its best level against the dollar in about five months. It hovered at about R14.18/$ late on Friday, having gained almost 4% on the month.

The strong rand also boosted the local bond market, with the yield on the benchmark R186 nudging down to 9.045% on Friday, from 9.710% at the start of the year.

The key data that will likely grab global market attention this week are in the US nonfarm payrolls report. Local data due out include vehicle sales and Barclays’ manufacturing purchasing managers’ index.