Miners dig a hole for market
GOLD miners dragged the JSE down yesterday as the yellow metal plummeted more than R915 on the day. The drop came after China issued GDP growth numbers that came in well below consensus.
China is the world’s second-largest buyer of gold. At 5pm, the all-share index closed 1.62% lower at 38 003.70 points. Gold miners dropped 6.82%‚ platinums shed 4.86% and resources lost 3.19%. Banks gave up 3.05%.
Major European markets were lower‚ with London’s FTSE 100 down 0.62% at 4.50pm SA time.
“The fall in gold counters was a reaction to the meltdown in the price of bullion‚ which has lost $200 [R1 829] since late last week‚” Ryan Wibberley‚ an equity dealer at Investec Asset Management in Cape Town, said.
“The fall is not due to one single factor – it is a perfect storm. Goldman Sachs‚ Citigroup and Deutsche Bank cut back on their gold price forecasts last week and there were reports that Cyprus may have to sell some gold reserves. This led investors to wonder which European country was going to dump gold next‚” he said.
“The selling of exchange traded funds also contributed to the fall in the metal. I do not know if gold has found its floor yet. It may continue to fall.”
Weak Chinese first-quarter economic numbers also weighed on world stock exchanges‚ as the GDP growth of the world’s biggest consumer of commodities came in at 7.7% from an expected 8%.
Industrial production also fell short of expectations spurring concerns that a global economic recovery could be derailed. Meanwhile, US stocks’ declines gathered steam midmorning‚ on worries about economic growth in China and a steep tumble in commodity prices‚ Dow Jones Newswires re- ported. At 4.50pm local time, the Dow Jones industrial average was 0.43% lower. A better-than-expected earnings report from Citigroup provided some insulation from the macro concerns. The bank reported first-quarter earnings that topped earnings expectations‚ leading to a higher stock price.
On the JSE, bullion counter Harmony plummeted 8.87% to R45.61‚ AngloGold Ashanti slid 7.26% to R175 and Sibanye dropped 9.33% to R10.79.
Mining giant Anglo American dipped 2.66% to R219.75‚ rival BHP Billiton was down 1.82% at R253.66 and Sasol dropped 4.47% to R370.65. Exxaro retreated 3.06% to R145.16 and Kumba Iron Ore closed 3.85% lower at R437. – BDlive