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    Interest rate cut and strong oil price strengthen the rand and commodity markets

    Local Markets

    The JSE opened slightly higher this morning after tracking gains made in US markets and generally improved Asian indices. The main gainers were resources and commodities, with platinum counters having advanced over 3.15%. The markets have generally responded positively to SARB Governor Tito Mboweni’s announcement yesterday of another 100 basis-point interest rate cut. The pro-growth initiative of the central bank has encouraging investors towards a bullish outlook. The All Share was trading 1.59% up by midday.

    The rand strengthened significantly during the early session, on the back of Thursday’s interest rate cut. Market expectations of further rate cuts were edged backward after Reserve Bank Governor Tito Mboweni made it clear that the cycle of rate-cuts was drawing near to an end. With added support from an ailing US dollar, the currency has benefited from the pro-growth actions of the central bank. By noon today, a dollar traded for R7.94.

    In the commodities market, the oil price has fallen juts below its $65 per barrel mark during the morning session but is still firmly on track to reach its largest monthly percentage gain in more than a decade. After a meeting yesterday, OPEC announced that output would remain stable and US government data revealed that US crude oil inventories has dropped more than originally expected. These factors contributed to a surge in the oil price yesterday but today some of those gains have been capped. By midday, a barrel of Brent Crude cost $64.21.

    International Markets

    Equities in the US gained on Thursday after escalating oil prices drove up energy stocks and the yields in the bond market began to fall, assuaging worries that rising borrowing costs would restrict economic recovery. The Dow Jones closed 1.25% up whilst the Nasdaq gained 1.20%.

    The benchmark Nikkei managed to lock in slight gains overnight. Commodity-linked firms such as oil and gas developer Inpex helped the index to reach its highest point (9500 level) in over 7 months. For the month, it is up 7.9%, clocking its 3rd consecutive month of gains. The Nikkei closed 0.75% this morning.

    Shares in Hong Kong climbed overnight as energy issues were buoyed by higher oil prices and bank stocks gained from improved broker ratings. The benchmark Hang Seng closed 1.60% higher this morning.

    Equities in London advanced slightly in the early trade session this morning. This follows a late turnaround on Wall St overnight. The fate of General Motors still plagues the market. The motor manufacturer’s expected bankruptcy would leave 5 500 British jobs at risk. Monthly data from building societies has lifted sentiment as housing prices appear to be rising. By noon, the FTSE 100 had gained 1.21%.

    Share Price News

    Impala Platinum Holdings Ltd of the Platinum sector gained substantially this morning on the back of escalating platinum counters. By midday, its shares traded for R191.97 each, marking a 4.62% gain. From the same sector, Anglo American Platinum Corporation Ltd also managed to attract volumes of purchase with renewed interest in the commodity. At noon, a share cost R561.25, a 4.322% gain.

    Among the losers this morning, Netcare Ltd of the Hospital Management and Long Term Care sector has lost substantial ground with a sell-off of over 500 000 of its equities. By noon, a share traded for R10.01, reflecting a reduction of 2.82%. Vodacom Group Ltd of the Telecommunications Equipment sector lost steadily this morning as investors retreated towards commodity-linked stocks. At midday, a share cost R51.10, a 2.20% loss.

    Permalink2009-05-29, 12:43:26, by Grant Leyland Email , 1 comment
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