Miners drag SA bourse lower

JOHANNESBURG – Falling mining shares, hit by a sharp drop in metals prices, dragged South Africa’s stock market down on Tuesday, but the rand powered ahead to a near seven-month high, extending a recent rally.

The Johannesburg Top-40 index of blue-chip stocks closed 2,27 per cent lower at 18 179,22 points, while the All-share index dipped 1,91 per cent to 20 281,12 points. ‘(The market is driven down by) a combination of weak world markets, a very strong rand that’s affecting our market because resources are getting whacked, and weak metal prices,’ said Barend Saayman, a trader at Thebe Securities. World stocks were hit by the spread of swine flu and worries about its impact on the global economy. Gold slipped 2,5 per cent in Europe on technical selling, and platinum and palladium plunged more than five per cent.Heavyweight BHP Billiton dropped 6,03 per cent to N$173,84 and rival Anglo American sliped 5,74 per cent to N$172,49. The rand was trading at 8,6750 to the dollar in the afternoon, one per cent stronger than its previous close in New York after earlier touching 8,67, its firmest level since October 6.The currency started the session on the backfoot, slipping to 8,9050 after Asian markets fell and investors dumped riskier assets. But it later recovered, helped by the dollar weakening against the euro and a steady start for Wall Street.’A continuation of the trend really … if we can sustain this break, we can certainly go lower (firmer),’ Rand Merchant Bank trader Jim Bryson said, adding dollar selling by exporters gave it a further boost.The dollar fell against the euro after US housing and consumer confidence data lifted demand for riskier assets, although worries about swine flu and the health of the US banking sector capped the move.Speculation about the fate of respected Finance Minister Trevor Manuel in the country’s new cabinet, following the ruling ANC’s election win last week, failed to dent the rand’s appeal. Manuel may leave the finance post, although some traders hope he will be kept on for a transitional period.Government bonds gained, bolstered by the rand, on expectations interest rates may fall this year more than previous thought.A stronger rand will help to tame inflation, removing reasons for caution on rate cuts. ‘The rand is helping sentiment … from here any importer inflation fears are out the window,’ RMB bond dealer Mark Southworth said.The central bank is widely expected to reduce its repo rate by 100 basis points to 8,5 per cent today, taking total cuts to 350 basis points since December, with more policy loosening to come.On the local bourse, petrochemicals group Sasol was down 5,04 per cent to N$254,50 as crude oil prices fell, while Impala Platinum fell 4,09 per cent to N$152,70 and Lonmin was down 3,49 per cent to N$172,75.Gold Fields shed 2,82 per cent to N$97,18 and AngloGold Ashanti lost 1,66 per cent to N$283,80. -Nampa-Reuters