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Johannesburg - With all the good news on the American economic recovery discounted already, the global markets are looking again at the market valuations.
Although the latest payroll report in the US on Friday was slightly weaker than expected, it did still show an improvement in the American economy and did not warrant the selloff on Wall Street that followed – which was followed this morning in Asia and later on the JSE.
At midday, the All Share index on the JSE was 0.56% lower on 48 075 points, while the Top 40 index lost 0.57% 43 247 points. The biggest loser was the industrial index which lost 0.88% and was dragged down by another sharp fall in the share price of Naspers [JSE:NPN], the heavyweight in the sector, which lost another 5% on Monday.
Naspers is now trading at R1 050.00, more than R300 lower than its high on March 11. Investors are concerned about regulatory issues in China that threaten the growth prospects of Tencent, the Chinese internet giant in which Naspers holds a stake of 34%.
On Friday, the US Labour Department said the world's number one economy added 192 000 jobsin March - just below forecasts of 195 000 - while the unemployment rate held steady at 6.7%.
While the figure was an improvement on the past three months when the country was hit by a severe winter, the growth rate is unlikely to alter the pace of the Federal Reserve's stimulus tapering programme.
This should be good news for shares, but analyst said that investors are now beginning to look at valuations after the strong run the last couple of days. The Dow Jones lost almost 1% in Friday evening.
The dollar was under pressure after the latest pay roll data and the rand was trading at R10.55/$ by midday.
Imara SP Reid said in its market snapshot that selling pressure was building up in the local market after the lacklustre performance of US equities on Friday. A number of sectors were overbought and likely to give back some ground.
According to this report the overall index was relatively overbought and a revaluation was likely at current levels.
Imara SP Reid said the banking sector was particularly overbought and a retraction of 3 000 to 4 000 points are likely. Last week a few of the banking stocks, including Standard Bank [JSE:SBK] as FirstRand [JSE:FSR] reached new highs.
The financial 15-index was 0.46% lower. Standard dropped 1.36% and was trading at R138.10, compared to last week’s new high of R140.50. FirstRand was trading at R90.41 which is almost R7.00 lower than last week’s high of R97.19 and Nedbank [SJE:NED] was 0.67% higher on R218.99, which is still lower than last week’s high of R225.00.
Amongst the major rand-hedge shares SABMiller [JSE:SAB] was 0.47% lower at R543.05 after the news that Norman Adami, the chairperson of its South African interests, is stepping down. Adami has been synonymous with SAB’s incredible success in South Africa.
Amongst the major resources companies Sasol [JSE:SOL] lost 1.76% to R571.75 and is now R46 lower than its high at the end of March. Anglo American [JSE:AGL] gained 1.13% to R276.09 after starting the trading day more than 1% lower.
Among gold shares Harmony [JSE:HAR] rose 1.02% to R32.76‚ while Gold Fields [JSE:GFI] lost 1.28% to R40.70.
Although the latest payroll report in the US on Friday was slightly weaker than expected, it did still show an improvement in the American economy and did not warrant the selloff on Wall Street that followed – which was followed this morning in Asia and later on the JSE.
At midday, the All Share index on the JSE was 0.56% lower on 48 075 points, while the Top 40 index lost 0.57% 43 247 points. The biggest loser was the industrial index which lost 0.88% and was dragged down by another sharp fall in the share price of Naspers [JSE:NPN], the heavyweight in the sector, which lost another 5% on Monday.
Naspers is now trading at R1 050.00, more than R300 lower than its high on March 11. Investors are concerned about regulatory issues in China that threaten the growth prospects of Tencent, the Chinese internet giant in which Naspers holds a stake of 34%.
On Friday, the US Labour Department said the world's number one economy added 192 000 jobsin March - just below forecasts of 195 000 - while the unemployment rate held steady at 6.7%.
While the figure was an improvement on the past three months when the country was hit by a severe winter, the growth rate is unlikely to alter the pace of the Federal Reserve's stimulus tapering programme.
This should be good news for shares, but analyst said that investors are now beginning to look at valuations after the strong run the last couple of days. The Dow Jones lost almost 1% in Friday evening.
The dollar was under pressure after the latest pay roll data and the rand was trading at R10.55/$ by midday.
Imara SP Reid said in its market snapshot that selling pressure was building up in the local market after the lacklustre performance of US equities on Friday. A number of sectors were overbought and likely to give back some ground.
According to this report the overall index was relatively overbought and a revaluation was likely at current levels.
Imara SP Reid said the banking sector was particularly overbought and a retraction of 3 000 to 4 000 points are likely. Last week a few of the banking stocks, including Standard Bank [JSE:SBK] as FirstRand [JSE:FSR] reached new highs.
The financial 15-index was 0.46% lower. Standard dropped 1.36% and was trading at R138.10, compared to last week’s new high of R140.50. FirstRand was trading at R90.41 which is almost R7.00 lower than last week’s high of R97.19 and Nedbank [SJE:NED] was 0.67% higher on R218.99, which is still lower than last week’s high of R225.00.
Amongst the major rand-hedge shares SABMiller [JSE:SAB] was 0.47% lower at R543.05 after the news that Norman Adami, the chairperson of its South African interests, is stepping down. Adami has been synonymous with SAB’s incredible success in South Africa.
Amongst the major resources companies Sasol [JSE:SOL] lost 1.76% to R571.75 and is now R46 lower than its high at the end of March. Anglo American [JSE:AGL] gained 1.13% to R276.09 after starting the trading day more than 1% lower.
Among gold shares Harmony [JSE:HAR] rose 1.02% to R32.76‚ while Gold Fields [JSE:GFI] lost 1.28% to R40.70.
