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JSE battles to launch another run

Johannesburg - Local share prices are battling to launch another run, with profit takers using every opportunity to cash in as investors worry over valuations.

Although US stocks rose decisively on Monday after the reporting season started on a solid note, the local market did not respond to it in the usual way.

The All-share index, which closed higher on Monday due to higher commodity prices that boosted the resources sector, started lower on Tuesday morning and by midday the intraday graph still pointed downwards. All the major indices were lower.

By midday the All-share index was again below 48 000, showing an 0.57% drop at 47 937. The Top 40-index traded also lower and lost 0.55% to 43 027. The Financial 15 index was 0.22% lower, the industrial index shed 0.72% and the resources index lost 0.45%.       

The rebound on the New York markets was spurred by a solid earnings report from Citigroup and encouraging retail sales data, which was 1.1% better than expected.

The Dow Jones Industrial Average jumped 0.91% to 16 173.24, while the S&P 500 gained 0.82% at 1 830.61. The Nasdaq, which has fallen sharply over the last month, added 0.57% at 4 022.69.

Asian markets were mixed on Tuesday morning, with investors in Hong Kong and Shangai concerned about Wednesday's release of Chinese growth figures forecast to show a further slowdown in the economic giant.

The median forecast of a survey of 13 economists by AFP is 7.3% growth in the first quarter this year, which would mark the fourth slowdown in the past five quarters, putting China on track for its worst annual performance since 1990.

This figure is also of the utmost importance for the South African economy and local companies, as China is an important driver of international economic growth - vital for South African exports.

Resources companies are particularly sensitive to developments in China. Among those with particularly strong ties to China, Kumba Iron Ore lost 1.55% to trade at R384.90 and BHP Billiton was 0.88% lower at R336.00.

The good retail figures in the US also gave the dollar a boost, which was bad news for resources companies.

Pick n Pay Holdings, which reached a new high for the year on Monday, traded unchanged in the morning at R22.70. It seems that the good news about the results announced on Tuesday morning had already been discounted.

Pick n Pay announced an increase of 25% in headline earnings and a rise of 10% in its dividend, as the turnaround strategy of the new chief executive Richard Brasher seems to bear fruit.

SAB Miller traded 2.09% lower on Tuesday morning at R538.39, after announcing the group’s revenue for the year was only 3% higher than a year ago. The company also announced it is reviewing its 39.6% stake in hotel and gambling group Tsogo Sun, as it is not regarded as a core business any more.

Reunert’s decision to stop the activities of Nashua Mobile and sell its clients to Vodacom and MTN had little effect on share prices. Reunert by midday was only 0.10% higher at R68.57.
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Rand - Dollar
18.90
+0.2%
Rand - Pound
23.85
+0.2%
Rand - Euro
20.39
+0.2%
Rand - Aus dollar
12.31
+0.2%
Rand - Yen
0.12
+0.1%
Platinum
908.05
0.0%
Palladium
1,014.94
0.0%
Gold
2,232.75
-0.0%
Silver
24.95
-0.1%
Brent Crude
87.00
+1.8%
Top 40
68,346
0.0%
All Share
74,536
0.0%
Resource 10
57,251
0.0%
Industrial 25
103,936
0.0%
Financial 15
16,502
0.0%
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