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However, technical analysts warn that the current rebound, although strong, is predominantly of a technical nature after the market was very oversold.
But the major indices are now quickly approaching important resistance levels and even the next 48 hours could be of vital importance for the sustainability of the recovery.
The market’s movements were different on Wednesday morning compared to Tuesday, when there was a strong upward curve on the intraday graph for most of the day. On Wednesday the All-share index improved by more than 400 points (or 0.8%) in the first 30 minutes and then moved mostly sideways for the rest of morning.
By midday on Wednesday the All-share index was 0.81% higher at 48 852 points while the Top 40 index gained 0.84% to 43 545, just below the highly significant resistance level of 43 600.
Imara SP Reid said in its daily Market Snapshot that the index will probably trade above this level in the next 48 hours. The crucial factor will be the level of volume support for the run to be sustainable.
The JSE is supported by a stronger market tone worldwide. US markets traded sharply higher on Tuesday, as investors were encouraged by better than anticipated corporate earnings as well as a sharp rise in US consumer sentiment.
READ: Dow higher on consumer confidence
US consumer data was surprisingly brisk with a reading of 94.5, substantially ahead of the anticipated 87. Economists said lower gasoline prices encouraged sentiment.
Even the emerging markets in China, India and Brazil are sharply stronger as investors of developed markets are looking for better yields in these markets.
READ: Brazil markets rally after post-poll slump
The fact that the rand is much stronger at its best level in seven weeks is probably due to increased buying of local shares and bonds.
READ: Rand hovers near 7-week high
The markets are however waiting for the results of the Federal Reserve’s latest open market committee meeting in Washington, which is why investors were more circumspect after a strong opening.
The possibility that the Fed will stop buying back bonds is discounted already, but the markets are waiting to see what will happen with interest rates in the United States. Indications are that they will remain low for a considerable time, which is bad news for the dollar but good news for the rand and commodity prices.
The Resources index was 0.56% higher by Wednesday midday, with Anglo American [JSE:AGL] 1.4% higher at R238.28 after the group reported progress with its copper projects in Brazil.
Overseas interest helped the industrial sector move into the green and the index continues to grind its way back up towards the resistance area of 59 000 points.
Naspers [JSE:NPN] continued its upward move with another gain of 1.64% to R 281.17, while SABMiller [JSE:SAB] grinded 0.36% higher to R603.40.
Banking counters are supported by the stronger rand and the sector is edging back beyond the 65-day moving average. A move beyond 66 400 points is possible in the short term, but after that some marginal profit-taking is likely to happen.
By midday the financial sector improved by 1.05% with FirstRand [JSE:FSR] 1.20% higher at R45.58. The share price is now approaching the previous 52-week high of R46.61. Capitec [JSE:CPI] is already at a 52-week high with another gain of 1.14% to R283.09.
- Fin24
