South African stocks are expected to be jittery this week over Tuesday's US election, and a stronger rand could see resource shares wilt. The retail, industrial and financial sectors are expected to provide a safe haven for investors if gold and resource stocks continue to take a hit from the rand's strength. Gold miners could fall even further depending on who wins the US poll.
"(US President George) Bush is good for gold, gold prices have risen from about $280 to $430 an ounce since he took office," Morris Banda at Anglorand Securities said.
Daniel Spoormaker at Consilium Capital said investors at the Johannesburg stock exchange had already factored in a Bush win.
"The popular consensus is that the market is predicting a Bush win, if he loses it will put pressure on the market, this is the perception," he said. He added that investors would also start the new month by switching books to try out new sectors.
Gold stocks are expected to fall on a rampant rand seen destined for 6 rand to the dollar this week. The gold miners were mostly dull this week with giant gold producers posting weaker results as expected, on the back of a sturdy rand, which eroded their export earnings.
Harmony Gold, its bid target Gold Fields and AngloGold Ashanti Ltd, the world's second ranking gold producer, all reported weak quarterly earnings.
Banks, retailers and industrial stocks on the other hand were upbeat, and should remain so this week, analysts said.
The Johannesburg blue chip index has been up and down but gained about 0.17 percent so far this week while the all-share index was up about 0.5 percent.
The rand's three-month peak against the greenback at near 6 to the dollar, coupled with the aftershocks of China's interest rate hike could also be a factor, especially on resource shares.
Oil, steel, iron and other resource stocks are likely to suffer further after China raised interest rates this week, raising concerns that demand for resources could slow.
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