The JSE All Share index has moved into new high territory once again this week before risk aversion witnessed riskier assets being sold off exaggerating belated global market weakness.
The most noticeable move this week was that of the rand which depreciated (at the time of writing) more than 3% against the EUR and more than 2% against both the GBP and USD. The commencement of strike action in the platinum sector and the delayed possibility thereof in the gold sector certainly did little to assist the rand; however, weakness in our local currency was not isolated but rather correlated to that of our emerging market peers.
Chinese HSBC Flash Manufacturing PMI data missing expectation and alluding to a minor industry contraction was perhaps the initial catalyst to emerging market sentiment being dampened.
In the US, manufacturing activity and Existing home sales data was also reported worse than consensus estimates had predicted, while weekly unemployment claims data came in marginally better than expected.
The unemployment rate in the UK, was reported at 7.1% which catalyzed weakness as market participants start to anticipate the nearing of interest rate hikes as a result thereof.
It should be noted that the weight of positive economic data being released in the market place, as of late, has outweighed that which is negative and it would appear that investors are finding an excuse to take profit from a market which has been in overbought territory for a prolonged period.
Updated 24/01/2014 12:46
This week finds resource counters and more specifically gold miners once again dominating our table of top gainers.
Dollar denominated gold has etched higher during the course of the week, while the rand has weakened significantly providing favourable conditions for our miners of the precious metal.
Near term production and sentiment concerns have been relieved in the sector for now, after Amcu strike action at Sibanye Golds Driefontein as well as Harmony Golds’ Kuasalethu and Masimong mines were suspended pending a Labour court ruling which is expected on the 30th January.
Platinum shares have performed well despite further strike action commencing this week. Anglo Platinum plc issued a trading statement which witnesses the company returning to profit in 2013 after posting a loss in 2012 aiding positive sector sentiment, while Government agreeing to mediate labour talks provides further optimism on a timely resolution to these matters.
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