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JSE awaits data for direction

IT WILL be difficult to predict with confidence what direction the JSE will take this week, as the futures close out at the end of the week and changes in the composition of the major indices next week add more uncertainty to an already unstable political and economic environment.

The JSE opened stronger on Tuesday morning, taking its cue from firmer Asian markets and much better sentiment on Wall Street, but by midday these gains were lost and all the major indices were lower.

The JSE closed about 1% higher on Monday after a strong sell-off last week, due to bargain hunters who used opportunities that arose from the JSE’s short-term oversold position.

Analysts however warned on Tuesday morning that there was not much upward momentum left, as residual selling pressure still exists. Added to that the futures close out and the re-balancing of portfolios which follow the indices, and it is clear that the local market will often go against international trends.

By midday the All-share index lost 0.28% to 46 684 while the Top 40-index was 0.30% lower. Major indices such as the industrial and resources indices were also down, with the resources index losing 0.71%  after a strong run on Monday.

Standard Bank, the bank share which drove the market higher on Monday, was down on Tuesday morning, while Naspers, Monday's big loser, recovered strongly.

Positive news on Tuesday morning was indication that the market’s nervousness about the situation in Ukraine has subsided. Rand Merchant Bank said in a note that the market’s assessment is that the Ukrainian story is now old, and that the risks of a major global fallout are small and diminishing.

The markets are however waiting for the US Federal Reserve’s policy statement and local inflation figures on Wednesday, as well as the outcome of next week’s Reserve Bank monetary policy committee meeting for further market direction.

In the financial sector most bank shares were lower. The sector was boosted on Monday when Standard Bank rose 4%, after the bank said it would sell its Brazilian unit to Carlos Slim's Grupo Financiero Inbursa SAB.

Investors are hoping the bank could return the $45m (almost a half billion rand) from the sale to shareholders as a dividend.

Standard traded 1.7% lower at midday at R127.00, while Nedbank lost 1.31% to trade at R207.35 and Barclays Africa was virtually unchanged at R140.94.

Naspers, which is under pressure due to a sharp fall in the share price of Chinese internet firm Tencent, of which Naspers owns 34%, was 2.36% higher at midday at R1 195.01. Earlier in the day the share price was almost 4% higher, after losing 5% on Monday.

Among the resources stocks Anglo American lost 1.44% to trade at R253.30, while BHP Billiton traded 0.69% lower at R322.25.

Gold shares which made strong gains last week were the victims of profit taking, encouraged further by a weaker gold price. Gold Fields - which rose more than 13% last week - led the decliners in the gold space‚ falling 4.53% to R43.87, while Harmony slid 2.78% to R38.40.

 - Fin24
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