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Johannesburg - The share prices of some the big capitalisation shares on the JSE moved strongly on Wednesday morning, but there was no apparent reason other than bargain-hunting for big gains.
The Industrial index was more than 1% higher with heavyweights such as British American Tobacco [JSE:BTI], SABMiller [JSE:SAB], Richemont [JSE:CFR] and MTN [JSE:MTN] all making strong gains.
There was however signs that the market was losing momentum by midday on Wednesday, as all the intraday graphs of the major indices were heading strongly south at that stage.
After the market closed lower on Monday for the seventeenth time in 20 days, investors who saw opportunities to pick up bargains were quick off the mark on Wednesday.
By midday on Wednesday the All-share index was 0.79% higher at 51 704 points. The index opened more than 300 points higher than Monday’s closing level of 51 604 and traded as high as 51 844 before turning downwards again.
The Top 40 index opened at 45 629 points and traded as high as 46 126 before falling back to 46 027 points, 0.92% higher than Friday.
At midday the Industrial index was 1.24% higher and the Financial index 0.75% up, but both indices were also losing momentum. At that stage the Resources index was 0.42% lower and the Gold index 1.63% down.
The major issues that have been hanging over the markets - the Greek debt crisis, and uncertainty over the future levels of US interest rates - have not disappeared.
Wall Street was in fact sharply down on Tuesday, when the local market was closed for the Youth Day holiday. This is because it looks as if Europe is preparing for the possibility of Greece being forced to leave the eurozone, which could have repercussions for financial institutions in the developed world.
It seems that the Greek government is not prepared to make any more of the concessions its creditors require before a bailout for Greece can be approved, and is accusing the European countries of trying to humiliate Greece.
READ: Tsipras: Lenders want to 'humiliate' Greece
The market is also waiting for the outcome of a regular meeting of the Federal Reserve’s open market committee later on Wednesday, which will give an indication of when US interest rates will be hiked for the first time in more than ten years.
BAT was one the stars on Wednesday and added 3.96% to R685.10, while SABMiller traded 2.38% higher at R650.13.
Richemont was 0.70% stronger at R102.70, but Naspers [JSE:NPN] was only 0.05% stronger at R1 825.10 after it opened at R1 855.00.
On Wednesday morning the attention was on the communication sector after Vodacom’s [JSE:VOD] R7bn offer to buy internet provider Neotel was approved by South Africa’s communications regulator.
This will have far-reaching consequences for its competitors, as Vodacom will acquire additional infrastructure and valuable bandwidth. Vodacom’s share price however did not respond and was only 0.70% higher at R133.30.
But investors saw value in MTN which has lost more than 10% of its value over the past month, and the share price gained 2.10% to R223.51. Telkom [JSE:TKG] was 0.84% lower at R58.80 on the news.
