Anglo American leads South African stocks higher, rand weakens

JOHANNESBURG – South Africa stocks ended slightly higher on Friday, led by Anglo American in what dealers said was a “short squeeze” rather than a change in the prospects of the mining firm, while the rand was slightly weaker in a see-saw session.

Anglo American, which is also listed in London , rallied 11.66 percent to 82.74 rand, extending since Wednesday to nearly 50 percent.

Equity dealers said the company, along with other miners, was rising on the back of traders cancelling their short positions.

A short squeeze refers to a jump in a stock’s price, forcing a large number of short sellers, or those that had bet on the stock falling further, to close their position, which in effect pushes the price even higher.

On the foreign exchange market, the rand gave up earlier gains after data showed U.S. employment gains slowed more than expected in January.

The rand touched a session high of 15.7700 in volatile trade when the data was released and then soon gave up its gains as the market tried to make sense of the details, looking for signs whether the U.S. Federal Reserve will raise rates sooner than expected.

By 1513 GMT, the rand was trading 0.38 percent down against the dollar to 15.9600, compared to where it closed in New York on Thursday.

The dollar rose against a basket of currencies and left investors with a muddled view on rate hike prospects.

“Overall, the rise in U.S. employment report in January is solid, especially if one takes into account the decline in the unemployment rate, and the better than expected rise in wages,” said Stanlib’s chief economist Kevin Lings.

Government bonds were flat at 1515 GMT, with the benchmark paper due in 2026 unchanged at 9.170 percent..

On the bourse, the JSE Top 40 index gained 0.36 percent to 44,453 and the broader All-share index added 0.25 percent to 49,753.

Trading volumes were slow with more than 251 million shares changing hands, below last year’s daily average of 296 million shares.