Publications
Partners
Johannesburg - The major indices on the JSE made another hesitant effort on Monday morning to turn the negative market trend around.
Although the market was still higher by Monday midday, the All-share and Top 40 indices have lost almost half of the strong gains made shortly after the opening.
Analysts expected the market to launch a recovery on Monday morning, but warned any rally would not really be sustainable if the Top 40 index did not succeed in breaching the important resistance level of 43 600.
By midday the Top 40 index was 0.66% higher at 42 957 points after trading at 43 200 points at one stage, and the All-share index traded 0.64% stronger at 48 184 points after reaching 48 400 points earlier in the day.
The Industrial index was a solid 1.08% higher, but resources lost 0.39%.
Analysts now say it might take a while for buyers to enter the market aggressively, although the downward momentum seems to have lost steam as last week’s losses did not reach the previous weeks' levels.
Last week’ s mini budget has put a damper on the prospects of companies which do business in the consumer market, as higher taxes in a stumbling economy could have a detrimental effect on spending.
READ: Budget in a nutshell
The possibility of higher taxes came at an inopportune time, as it seems retailers are beginning to do better. Last week Clicks [JSE:CLS] reported better-than-expected results, and on Monday morning Shoprite [JSE:SHP] said sales in the first quarter of its financial year were higher than in the corresponding period the previous year.
READ: Shoprite Group increases turnover
Revenue rose 12.3% in the three months to September, compared with an increase of 10% in the first quarter of the previous year. Sales at its South African supermarkets increased 11.9%.
Shoprite’s share price increased by 6.41% to R150.00, while Clicks added another 3.8% to R68.50.
Mr Price [JSE:MPC], which announced first-half earnings growth of 22% last week, gained another 2.25% to trade at R218.91, just below the 52-week high of R219.00. At one stage the share traded at R220.56.
Analysts are also waiting to see what will happen at this week’s US Federal Reserve meeting. Unless it springs a major surprise, the US Federal Reserve will call time this week on its programme of government bond purchases, which at one point was pumping $85bn a month into financial markets and the economy.
READ: Global economy ahead: Fed to turn off taps
A lot of the money pumped into the US economy this way found its way into stocks markets worldwide, including emerging markets like South Africa, seeking higher yields than the record low US interest rates. It is not clear what will happen, particularly on the JSE, if this money is not available any more.
Imara SP Reid said Wall Street has delivered a remarkably vibrant trading rebound, largely as a result of marginally better than anticipated US earnings, as well as positive comments from US corporations with regard to operational activities in the quarters ahead.
The attention in the coming week will therefore be focused on company results instead of the world economy.
Banks performed strongly on Monday morning as local banks followed their European counterparts higher after the results of the region's banking sector health checks painted a brighter picture than many investors had expected.
READ: ECB fails 25 banks in stress test
Roughly one in five of the eurozone's top lenders failed landmark health checks at the end of last year but most have since repaired their finances, the Europen Central Bank said on Sunday.
The Financial index gained 0.84% and FirstRand [JSE:FSR] traded 1.41% higher at R44.01. Standard Bank [JSE:SBK] improved by 0.71% to R129.87.
- Fin24
Although the market was still higher by Monday midday, the All-share and Top 40 indices have lost almost half of the strong gains made shortly after the opening.
Analysts expected the market to launch a recovery on Monday morning, but warned any rally would not really be sustainable if the Top 40 index did not succeed in breaching the important resistance level of 43 600.
By midday the Top 40 index was 0.66% higher at 42 957 points after trading at 43 200 points at one stage, and the All-share index traded 0.64% stronger at 48 184 points after reaching 48 400 points earlier in the day.
The Industrial index was a solid 1.08% higher, but resources lost 0.39%.
Analysts now say it might take a while for buyers to enter the market aggressively, although the downward momentum seems to have lost steam as last week’s losses did not reach the previous weeks' levels.
Last week’ s mini budget has put a damper on the prospects of companies which do business in the consumer market, as higher taxes in a stumbling economy could have a detrimental effect on spending.
READ: Budget in a nutshell
The possibility of higher taxes came at an inopportune time, as it seems retailers are beginning to do better. Last week Clicks [JSE:CLS] reported better-than-expected results, and on Monday morning Shoprite [JSE:SHP] said sales in the first quarter of its financial year were higher than in the corresponding period the previous year.
READ: Shoprite Group increases turnover
Revenue rose 12.3% in the three months to September, compared with an increase of 10% in the first quarter of the previous year. Sales at its South African supermarkets increased 11.9%.
Shoprite’s share price increased by 6.41% to R150.00, while Clicks added another 3.8% to R68.50.
Mr Price [JSE:MPC], which announced first-half earnings growth of 22% last week, gained another 2.25% to trade at R218.91, just below the 52-week high of R219.00. At one stage the share traded at R220.56.
Analysts are also waiting to see what will happen at this week’s US Federal Reserve meeting. Unless it springs a major surprise, the US Federal Reserve will call time this week on its programme of government bond purchases, which at one point was pumping $85bn a month into financial markets and the economy.
READ: Global economy ahead: Fed to turn off taps
A lot of the money pumped into the US economy this way found its way into stocks markets worldwide, including emerging markets like South Africa, seeking higher yields than the record low US interest rates. It is not clear what will happen, particularly on the JSE, if this money is not available any more.
Imara SP Reid said Wall Street has delivered a remarkably vibrant trading rebound, largely as a result of marginally better than anticipated US earnings, as well as positive comments from US corporations with regard to operational activities in the quarters ahead.
The attention in the coming week will therefore be focused on company results instead of the world economy.
Banks performed strongly on Monday morning as local banks followed their European counterparts higher after the results of the region's banking sector health checks painted a brighter picture than many investors had expected.
READ: ECB fails 25 banks in stress test
Roughly one in five of the eurozone's top lenders failed landmark health checks at the end of last year but most have since repaired their finances, the Europen Central Bank said on Sunday.
The Financial index gained 0.84% and FirstRand [JSE:FSR] traded 1.41% higher at R44.01. Standard Bank [JSE:SBK] improved by 0.71% to R129.87.
- Fin24
