Miners sink but banks gain

A RECOVERY in banking and financial stocks – on a firmer rand – was not enough to boost the overall South African market yesterday.

The JSE closed lower, with mining stocks dragging down the all-share.

Gold and platinum stocks lost 1% in tandem with oil prices‚ despite a slightly weaker dollar against the euro.

A lower Brent crude price caused renewed disinflationary concerns‚ resulting in a weaker dollar.

Old Mutual Multi-Managers investment strategist Dave Mohr said higher commodity prices‚ together with strong domestic consumer spending that supported retailers‚ was necessary for the economy to recover from its recessionary conditions.

Mohr pointed out that commodity prices plunged across a broad front between 2011 and 2015 as China’s economic growth slowed and the US dollar strengthened. “This had a massive impact on our economy, not just on the mining sector but also manufacturing‚ construction‚ transport‚ employment and state finances‚” he said.

“The past two months have unfortunately seen fresh declines in coal and iron ore prices.”

The resources 10 index has lost 9.6% so far this year‚ platinum stocks 12% and gold 8%. In contrast‚ the rand has gained 6.5% against the dollar‚ which could have supported banks.

But local political uncertainty and the downgrades had resulted in the banking index losing 7.2% so far, Mohr said. General retailers had lost 9.1%.

The JSE all-share closed 0.42% lower at 51 288.7 points and the blue-chip Top 40 lost 0.54%.

Platinums dipped 1.76%‚ gold 1.7%‚ resources 1.2%‚ food and drug retailers 0.66% and industrials 0.53%. Banks gained 1.48% and financial stocks 0.41%.