Kumba Iron Ore helps pull shares higher

Miner’s surge was propelled by a rebound in iron ore futures in China.

South African stocks rose on Thursday more than 2%, led by Kumba Iron Ore as Beijing halted a sell-off in Chinese shares, bringing relief to commodity companies.

Kumba’s 6.3% surge was propelled by a rebound in iron ore futures in China, which rose as much as 8% after a rout that pulled prices to record low, but traders remained wary because of soft steel demand.

The shares also got a lift from technical factors after momentum indicators indicated it had strayed into oversold territory.

“Kumba’s rise today is a bit of relief but the fundamentals of the company are still weak,” said Rabi Thithi, an equities trader at Avior Research.

There are signals the company is trying to shore up profits. Trade union Solidarity said the Anglo American unit, which has lost over half its value the past year, would cut about 190 jobs at its operations.

In the biggest jump daily since December, Johannesburg’s Top-40 index closed up 2.67% at 45,872 and the broader All-share index gained 2.42% to 51,452.

Among the decliners was furniture retailer Lewis Group , which slid 6.7% to R84 after the credit regulator asked the National Consumer Tribunal to impose a fine on the furniture retailer for mis-selling credit insurance.

Sasol was 2.7% higher, closing at R423, as crude oil held small gains as gasoline demand and supportive economic data from Germany provided a floor for prices.

Mediclinic made a 3.6% gain after the company announced its intent to repurchase 23.4 million shares from a black empowerment partner.

Trade was active with 203 million shares changing hands, higher than last year’s daily average of 183 million. 

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