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Johannesburg - The All-share index on the JSE lost further ground on Thursday morning, and the local stock market is now more than 2% lower than last Friday’s record levels.
Market analysts say the correction is to be expected after the recent strong run, which pushed the All-share index to new records above 52 000 points, but there is no cause for concern.
Imara SP Reid said in its daily market snapshot that there is technical evidence that some sectors are still overbought, which led to selling pressure, but other analysts said there was no evidence of huge selling of shares.
It is rather a case of investors currently not buying as aggressively as in the past.
By midday on Thursday the All-share index was 0.62% lower at 51 083 points and the Top 40 index lost 0.74% to 45 999.
Among the major indices the Financial index lost 1.25%, while the Industrial index was 0.65% lower and the Resource index slipped 0.44%.
The only positive performer was gold, which rose for the second consecutive day and was 2.77% higher.
There is still a huge amount of money from pension funds and other investment institutions locally and abroad seeking a home and with interest rates at record low levels, there are not many options other than shares available.
The markets did receive confirmation on Wednesday that interest would remain low for quite a while longer, when the minutes of the June meeting of the Federal Open Market Committee showed the central bank planned to end its bond-buying programme in October.
But the Fed also expects it will not begin raising its near-zero benchmark interest rate for "a considerable time" after the asset purchase programme ends, "especially if projected inflation continued to run below the committee's 2% longer-run goal", the minutes said.
"They still are not in any rush to change monetary policy," said Peter Cardillo, chief market economist at Rockwell Global Capital.
This news gave Wall Street a boost on Wednesday night, but Asian shares were mixed on Thursday and the local market lost ground after a promising start.
The mood was spoilt somewhat by news that the Chinese economy was improving, but perhaps not at the rate that investors were hoping for.
In China the General Administration of Customs said exports rose 7.2% year-on-year in June while imports gained 5.5%.
The figures were up from May, although exports were well short of forecasts. Growth of 15% was expected.
The state of the Chinese economy is of particular importance for resources companies, which are selling commodities to Chinese industries.
Among the major commodity stocks Sasol [JSE:SOL] lost 1.72% to R618.70 and BHP Billiton [JSE:BIL] was 0.91% lower at R359.16. Anglo American [JSE:AGL] was however marginally (0.09%) stronger at R277.25.
In the industrial sector SABMiller [JSE:SAB] lost 0.79% to R593.50 and the share is now more than 5% lower than the record of R627.36 set about a month ago.
Gold shares are supported by a higher gold price, which edged up for a second day, helped by a weaker dollar and the news that the Fed does not plan an early interest hike in the US.
The market was also eyeing developments in the second-biggest consumer India, where the new government is expected to cut a record high import duty on gold at the budget to be presented later on Thursday.
Gold traded 1.22% higher at $1 342.70.
Among the top gold shares Gold Fields [JSE:GFI] improved by 3.72% to R44.00 while Harmony Gold [JSE:HAR] was 4.65% better at R35.79. Harmony improved by 23.7% over the last six months and is now only 0.9% lower for the year.
Market analysts say the correction is to be expected after the recent strong run, which pushed the All-share index to new records above 52 000 points, but there is no cause for concern.
Imara SP Reid said in its daily market snapshot that there is technical evidence that some sectors are still overbought, which led to selling pressure, but other analysts said there was no evidence of huge selling of shares.
It is rather a case of investors currently not buying as aggressively as in the past.
By midday on Thursday the All-share index was 0.62% lower at 51 083 points and the Top 40 index lost 0.74% to 45 999.
Among the major indices the Financial index lost 1.25%, while the Industrial index was 0.65% lower and the Resource index slipped 0.44%.
The only positive performer was gold, which rose for the second consecutive day and was 2.77% higher.
There is still a huge amount of money from pension funds and other investment institutions locally and abroad seeking a home and with interest rates at record low levels, there are not many options other than shares available.
The markets did receive confirmation on Wednesday that interest would remain low for quite a while longer, when the minutes of the June meeting of the Federal Open Market Committee showed the central bank planned to end its bond-buying programme in October.
But the Fed also expects it will not begin raising its near-zero benchmark interest rate for "a considerable time" after the asset purchase programme ends, "especially if projected inflation continued to run below the committee's 2% longer-run goal", the minutes said.
"They still are not in any rush to change monetary policy," said Peter Cardillo, chief market economist at Rockwell Global Capital.
This news gave Wall Street a boost on Wednesday night, but Asian shares were mixed on Thursday and the local market lost ground after a promising start.
The mood was spoilt somewhat by news that the Chinese economy was improving, but perhaps not at the rate that investors were hoping for.
In China the General Administration of Customs said exports rose 7.2% year-on-year in June while imports gained 5.5%.
The figures were up from May, although exports were well short of forecasts. Growth of 15% was expected.
The state of the Chinese economy is of particular importance for resources companies, which are selling commodities to Chinese industries.
Among the major commodity stocks Sasol [JSE:SOL] lost 1.72% to R618.70 and BHP Billiton [JSE:BIL] was 0.91% lower at R359.16. Anglo American [JSE:AGL] was however marginally (0.09%) stronger at R277.25.
In the industrial sector SABMiller [JSE:SAB] lost 0.79% to R593.50 and the share is now more than 5% lower than the record of R627.36 set about a month ago.
Gold shares are supported by a higher gold price, which edged up for a second day, helped by a weaker dollar and the news that the Fed does not plan an early interest hike in the US.
The market was also eyeing developments in the second-biggest consumer India, where the new government is expected to cut a record high import duty on gold at the budget to be presented later on Thursday.
Gold traded 1.22% higher at $1 342.70.
Among the top gold shares Gold Fields [JSE:GFI] improved by 3.72% to R44.00 while Harmony Gold [JSE:HAR] was 4.65% better at R35.79. Harmony improved by 23.7% over the last six months and is now only 0.9% lower for the year.
