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Johannesburg - South African shares for once went against the rest of the world on Monday morning, when major indices bounced back from support levels that came into play after Tuesday's sharp drop in share prices.
More news about the sorry state of the Chinese manufacturing sector sent Asian stocks tumbling on Wednesday morning, but for once the JSE did not follow despite the negative ramifications a further slowdown in the Chinese economy can have for South African commodities exports. Wall Street was also lower on Tuesday.
European stocks were however higher and that supported the major doubled-listed shares on the JSE.
By midday the All-share index was 0.98% higher at 50 340 points and the Top 40-index had gained 1.11% to 45 017 points. The Industrial index gained 1.12% and the Financial index 1.17%, with the Resources index 0.54% higher after Tuesday’s sharp drop of more than 4%.
The Gold index was however a further 2.4% lower, but the index is still 10% stronger over the past 30 days.
Even technical analysts expected South African shares would be under further pressure, but the rebound is good news as the Top 40 index was again approaching the very important support level of 4 380 points. A drop below this level can lead to further selling pressure.
Concern about the state of the global economy, and particularly the Chinese economy, will however not disappear and continues to influence the local market. The dollar also remains strong, which is equally bad news for emerging market economies and currencies, with the rand dropping to R13.69 to a dollar on Wednesday morning.
READ: Rand hit by China slowdown fears, stocks lower
China's closely watched purchasing managers' index of manufacturing activity for September came in at a six-and-a-half-year low and showed the sector contracted further.
The preliminary reading released by financial publisher Caixin came in at 47.0, down from August and missing expectations of 47.5. A result below 50 indicates shrinkage and anything above 50 points to growth.
The better-than-expected inflation figures also lifted the mood on the local market, as it could persuade the Reserve Bank’s monetary policy committee to leave its repo rates unchanged at its meeting this week.
READ: CPI remains level at 4.6% ahead of rates decision
The consumer price index, which measures the country's inflation rate, measured 4.6% in August month-on-month, which was 0.4 of a percentage point lower than the corresponding annual rate of 5% in July 2015. Prices were unchanged between July 2015 and August 2015, Statistics SA said in a statement. This is the first monthly drop in year-on-year inflation following five months of increases.
Among the big double-listed industrial shares Naspers [JSE:NPN] gained 1.87% to R1 718.17 and SABMiller [JSE:SAB] rose 0.75% to R740.51 after some profit-taking over the past few days. The share sparked last week’s rally on the JSE by gaining more than 20% on news that the world’s biggest brewery Anheuser-Busch InBev wants to acquire SABMiller.
British American Tobacco [JSE:BTI] gained 0.71% to R734.31, but Richemont [JSE:CFR] was only 0.08% stronger at R104.13.
Among the resources shares also listed in London BHP Billiton [JSE:BIL] improved by 0.89% to R218.14 and Glencore [JSE:GLN] gained 0.67% to R22.70.
In the financial sector the double-listed Old Mutual [JSE:OML] gained 1.38% to R218.14 and Sanlam [JSE:SLM] gained 2.06% to R59.50. FirstRand [JSE:FSR] was 0.83% stronger at R52.11 and Standard Bank [JSE:SBK] traded 0.67% stronger at R139.78. Standard Bank has lost more than 10% of its value over the past 30 days and 18.7% over the past 90 days.
