Copper and zinc likely to drag JSE down on Wednesday

FILE. The Kumba Kolomela iron ore mine in Postmasburg. The share of the mining company Photo: Gallo Images / Foto24 / Emile Hendricks

JOHANNESBURG -A rebound from Tuesday’s resources rout in which Assore fell 9.4 percent and Kumba Iron Ore lost 8.9 percent looked unlikely on Wednesday morning‚ with miners dragging Sydney’s S&P/ASX 200 index down 0.69% ahead of the JSE’s opening.

Base metal miners following iron ore prices down on Tuesday contributed to the JSE’s resources 10 index losing 3 percent. 

Copper futures prices were 2 percent lower at $5‚572.50/ton and zinc was down 3.75 percent at $2‚525.50/tonne on the London Metals Exchange on Wednesday morning‚ foreshadowing another bad day for miners.

READ: GDP: Fall in mining production puts SA economy in slump

The JSE’s biggest casualty on Tuesday was eXtract‚ which plunged 36 percent to 14c after its 21-percent-owner and key creditor enX announced a restructure plan involving eXtract’s mining contracting business MCC selling its fleet and inventory to settle debt.

“Despite the recent improvement in commodity prices‚ the long-term outlook for the contract mining sector remains poor. There is an oversupply of contract mining services in the market and the new eXtract board does not believe that the pricing power of contractors will improve sufficiently in the medium term to provide an acceptable return on capital‚” enX and eXtract said in a joint statement on Tuesday.

Statistics SA was to release March’s consumer price index (CPI) at 10am‚ providing a clue as to whether the Reserve Bank’s monetary policy committee will vote for an interest rate increase on 25 April.

According to the consensus of a poll of economists done by Trading Economics‚ inflation as measured by CPI will remain at about February’s 6.3 percent.

Pick n Pay said on 10 April it expected to report on Wednesday that its headline earnings per share (HEPS) for the 52 weeks to February 26 grew by up to 20 percent.

“The result will demonstrate the group’s progress in delivering a balanced and sustainable recovery. Greater operating efficiency is evident in the strong discipline on cost‚ more centralised supply chain and higher productivity in stores‚” the company said in its trading statement.

“Turnover growth of 7 percent reflects a difficult trading environment‚ alongside some internal disruption from refurbishments and store closures which are improving the quality of the estate.”

Industrial holding company PSG said on 12 April it expected to report on Wednesday HEPS for the year to end-February grew about 50 percent.

PSG said the jump in HEPS was mainly due to its empowerment trust Diepeo swinging to profit from a loss. Recurring HEPS growth‚ which excluded one-off windfalls‚ would be a more muted 16.8 percent to 18 percent.

Short-term insurer Indequity warned shareholders on 13 April that it expected to report on Wednesday that its HEPS for the six months to end-March declined by up to 24 percent.

The decline was largely due to severe flash floods in Gauteng during November‚ resulting in unusually high claims‚ Indequity said.

Vehicle dealer chain Combined Motor Holdings is also expected to release its results on Wednesday. It has not issued a trading statements‚ as would be required if earnings differed by more than 20 percent of the comparative period’s.

iNet Bridge

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