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Johannesburg - Share prices on the JSE consolidated as expected on Thursday morning after the strong rebound of the last few days, with resources stocks mostly pulling the major indices modestly lower.
The resources sector was once again the victim of a stronger dollar after analysts interpreted the US Federal Reserve’s statement on monetary policy as more hawkish than it seemed to be on the surface.
By midday the All-share index was only 0.24% lower at 48 997 points, while the Top 40 index lost 0.25% to 43 688 points.
The technical analysts of Imara SP Reid said in their daily Market Snapshot that a degree of consolidation with a modest downward bias was to be expected, as certain sectors have enjoyed particularly brisk advances.
At midday on Thursday the Top 40 index was also above the important resistance level of 43 600, but Imara SP Reid said some residual selling pressure can be expected as the index tries to hold above this level.
Further technical improvement will only materialise if the Top 40 index holds its ground beyond this level on the back of solid volume support in the next few trading sessions.
But most of Thursday morning's losses were due to resources stocks which fell 1.63% by midday. The Financial index was 0.25% higher and the Industrial index a modest 0.17%.
Resources’ old enemy, a strong dollar, resurfaced again on Thursday morning as the American currency strengthened against the yen and other currencies on expectations that the Fed might raise interest rates earlier than predicted in the official statement.
The Fed did said it would not raise interest rates for "a considerable time" after the end of the quantitative easing programme, sticking to its timetable of an increase well into 2015, but analysts read more between the lines.
The Fed's policy statement cited improving labour market conditions and expressed little concern about low inflation, elements that led some analysts to characterise the statement as more hawkish than expected. Poor labour market conditions as well as low US inflation are the reasons why the Fed has been reluctant to raise interest rates too soon until now.
"The Fed is positioning itself, but it hasn't taken the decision” to raise rates, said Gregori Volokhine, president of Meeschaert Capital Markets.
Some of the heavyweights in the resources sector reached new 52-week lows on Thursday morning, after trading at 52-week highs earlier in the year. One of them is BHP Billiton [JSE:BIL] which dropped 1.65% to R282.61, just three months after the share reached a 52-week high of R376.25. This is a drop of almost 16% over the last three months.
Exxaro [JSE:EXX] was at a new low of R117.31, 1.10% lower than Wednesday’s close. In January this year the share reached a high of R158.95.
Among the gold shares AngloGold Ashanti [JSE:ANG] dropped 2.63% to reach a new low of R100.14 and Harmony Gold [JSE:HAR] was a massive 5.11% lower at R18.21.
In the banking sector FirstRand [JSE:FSR] reached a new 52-week intraday high before losing ground again. Analysts warned however that the banking sector might be overbought.
By Thursday FirstRand was 0.54% higher at R46.35.
- Fin24
The resources sector was once again the victim of a stronger dollar after analysts interpreted the US Federal Reserve’s statement on monetary policy as more hawkish than it seemed to be on the surface.
By midday the All-share index was only 0.24% lower at 48 997 points, while the Top 40 index lost 0.25% to 43 688 points.
The technical analysts of Imara SP Reid said in their daily Market Snapshot that a degree of consolidation with a modest downward bias was to be expected, as certain sectors have enjoyed particularly brisk advances.
At midday on Thursday the Top 40 index was also above the important resistance level of 43 600, but Imara SP Reid said some residual selling pressure can be expected as the index tries to hold above this level.
Further technical improvement will only materialise if the Top 40 index holds its ground beyond this level on the back of solid volume support in the next few trading sessions.
But most of Thursday morning's losses were due to resources stocks which fell 1.63% by midday. The Financial index was 0.25% higher and the Industrial index a modest 0.17%.
Resources’ old enemy, a strong dollar, resurfaced again on Thursday morning as the American currency strengthened against the yen and other currencies on expectations that the Fed might raise interest rates earlier than predicted in the official statement.
The Fed did said it would not raise interest rates for "a considerable time" after the end of the quantitative easing programme, sticking to its timetable of an increase well into 2015, but analysts read more between the lines.
The Fed's policy statement cited improving labour market conditions and expressed little concern about low inflation, elements that led some analysts to characterise the statement as more hawkish than expected. Poor labour market conditions as well as low US inflation are the reasons why the Fed has been reluctant to raise interest rates too soon until now.
"The Fed is positioning itself, but it hasn't taken the decision” to raise rates, said Gregori Volokhine, president of Meeschaert Capital Markets.
Some of the heavyweights in the resources sector reached new 52-week lows on Thursday morning, after trading at 52-week highs earlier in the year. One of them is BHP Billiton [JSE:BIL] which dropped 1.65% to R282.61, just three months after the share reached a 52-week high of R376.25. This is a drop of almost 16% over the last three months.
Exxaro [JSE:EXX] was at a new low of R117.31, 1.10% lower than Wednesday’s close. In January this year the share reached a high of R158.95.
Among the gold shares AngloGold Ashanti [JSE:ANG] dropped 2.63% to reach a new low of R100.14 and Harmony Gold [JSE:HAR] was a massive 5.11% lower at R18.21.
In the banking sector FirstRand [JSE:FSR] reached a new 52-week intraday high before losing ground again. Analysts warned however that the banking sector might be overbought.
By Thursday FirstRand was 0.54% higher at R46.35.
- Fin24
