Decline in mining stocks sees the JSE fall from record high

All Share Index breaches 69 000 points for the first time, but ends the day 0.27% lower

SOUTH African stocks eased in late trade yesterday after swinging to an alltime high with the FTSE/JSE All Share Index (Alsi) breaching the 69 000 point mark for the first time before retreating and ending the day in the red.

The JSE benchmark index rallied more than 1.8 percent to 69 403 points during early trade as rising commodity prices lifted assets.

But the Alsi reversed the gains to close 0.27 percent lower at 68 326 points, dragged down by mining stocks as the gold spot price fell 0.76 percent to $1 709 (about R25 655) an ounce.

Major losses were recorded by resources and mining stocks as both indices lost 1.51 percent and 1.61 percent to 69 437 points and 66 173 points, respectively.

African Mineral Resources fell 4.22 percent to R284.63 per share, BHP was 3.8 percent down to R473.37, while Anglo American eased 0.53 percent to R611.86 per share.

The JSE has performed impressively since the beginning of 2021, increasing by more than 9 000 points, or more than 15 percent, so far this year.

February saw the JSE rise for a fourth consecutive month as positive developments in the US stimulus bill and progress in Covid-19 vaccine roll-outs continued to boost investor sentiment.

Anchor Capital’s derivatives specialist, Henre Herselman, said the momentum at international level was boosting the local market.

Herselman, however, said they wouldn’t be surprised to see some form of correction or consolidation in the near term.

“Momentum is firmly behind the All Share, as our resource counters and Naspers powers the local market to new highs, and one would have to favour the momentum,” Herselman said.

“I do, however, think some form of caution is advised in the short term, as the JSE has rallied nearly 15 percent in the first two months of the year already, leaving many short-term technical indicators a little overstretched.”

The rand remained muted as it rose 0.03 percent to R15 on the mark against the greenback by 5pm, reversing earlier gains after peaking at R14.88 as the dollar surged.

The dollar index edged higher as Treasury yields increased amid prospects of a strong economic rebound supported by a fiscal stimulus and a faster coronavirus vaccine roll-out.

Investors have been gauging the economic recovery, a potential stimulus package and quicker vaccination roll-outs in the US.

TreasuryOne’s currency strategist, Andre Cilliers, said the rand was likely to continue to trade lower for now, driven by movements in international markets.

“Traders will be keeping an eye on whether (US President Joe) Biden's $1.9 trillion fiscal stimulus package finally gets approved, as well as Friday's all-important payrolls data,” Cilliers said.

Investec economist Annabel Bishop said although the relaxation of the lockdown restrictions on Sunday opened up more economic activity somewhat, the county’s vaccine rollout programme remained a matter of concern.

Bishop said there were indications that the country could suffer a third and even a fourth wave of infections before herd immunity was attained.

She said economic activity would likely be weakened by the interruptions, with a third wave of infections expected in the second quarter.

“That is unless the full healthcare sector, both private and public, rolls out the vaccines much quicker than this, allowing for faster economic growth and the avoidance of a third, and even multiple, waves of Covid-19 infections, with multiple tightening of lockdown restrictions,” Bishop said.