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JSE indices move sideways but resources shine

Johannesburg - The JSE joined the global market rally on Wednesday morning, with all major indices above important psychological levels by midday.

Talk of a rally may however be inappropriate as the All-share and Top 40 indices both opened sharply higher but by midday the opening levels were still the highest of the day, indicating that share prices moved mostly sideways or even dipped slightly during the morning session.

The global rally was started by a turnaround in Chinese shares on Tuesday, with Wall Street also higher on Tuesday afternoon. Asian markets responded strongly on Wednesday particularly when Chinese shares rose again, and the Nikkei index recorded its biggest single-day gain in seven years.

Better-than-expected eurozone growth also gave European markets a strong boost on Wednesday morning, with major markets more than 2% higher.

By midday the All-share index was again above 50 000 points, trading 1.37% higher at 50 251 points. The index opened at 50 348 points and never reached that level again during morning’s trade.

The Top 40 index was 1.51% higher at 44 740, above the important resistance level of 44 380 points, but it also never reached the opening level of 44 852 again during morning trade.

The recovery in Chinese shares, which sparked the global rally, was started by expectations that Chinese authorities would announce more stimulatory measures to boost the world’s second-biggest economy after weaker-than-expected trade data in August.

China's Finance Ministry said on Wednesday it would strengthen fiscal policy, boost infrastructure spending and speed up tax reform, which lifted Chinese shares for a second day. The Nikkei index in Tokyo gained 7.71% and the Hang Seng index in Hong Kong 4.10%.

The 19-nation eurozone grew by 0.4% in the second quarter, official data showed, revising upward a first estimate of 0.3% which triggered worries that the Greek financial crisis had destabilised growth in Europe.

The possibility of a further boost to the Chinese economy is good news for resources shares, and the Resources index was the star performer with a gain of 3.97% on Wednesday morning.

There was much interest in news that Anglo American Platinum (Amplats) [JSE:AMS] will sell its Rustenburg mines to the gold producer Sibanye Gold [JSE:SGL] for a minimum of R4.5bn. Amplats and its parent company Anglo American [JSE:AGL] both soared by more than 5% as the sale of these loss-making operations will relieve a great deal of pressure on the world biggest platinum producer.

READ: Amplats sells Rustenburg mines to Sibanye for R4.5bn

By midday Anglo American was 5.54% higher at R157.66 after losing 27.7% over the previous 30 days.

Amplats was at that stage 4.96% stronger at R329.57. Investors seem to think Sibanye can turn the Rustenburg operations around, as the share price was at one stage 7.1% stronger at R18.32.

Two of the big losers of recent months, Glencore [JSE:GLN] and African Rainbow Minerals [JSE:ARI], which both reached new 52-week lows recently, also recovered strongly. Glencore was higher for the third consecutive day and traded 5.40% up at R29.45.

African Rainbow Minerals [JSE:ARI], which lost 36.94% over the past 30 days and 58.6% over the past 12 months, traded a massive 7.71% higher at R72.39. BHP Billiton [JSE:BIL] was 4.35% higher at R231.50.

The technical analysts of Imara SP Reid said in their daily Market Snapshot on Wednesday morning that further gains are possible, but profit-taking and selling pressure may reappear in a few days.

Much will depend on what will happen next week with US interest rates and a sustainable run will rely heavily on a decision by the Federal Reserve not to increase rates in the immediate future.

The Industrial index gained 0.98%, with Naspers [JSE:NPN] trading 1.07% higher at R1 715.28. Most of Naspers’ value is in its 34.4% interest in internet giant Tencent, which is now again the largest internet company in Asia after its biggest competitor Alibaba lost $140.7bn of its value over the past 10 months. Tencent also defied a three-month downturn in Chinese stocks by gaining 17% this year in Hong Kong trade.

Steinhoff [JSE:SHF], which announced solid results on Tuesday and increased its dividend by 10%, reached a new 52-week high on Wednesday morning, after the share price gained 2.48% to R83.21. The stock is now more than 54% higher than a year ago.

In the financial sector MMI Holdings [JSE:MMI] bucked the trend by losing 1.63% to R25.92. The insurer said fiscal full-year profit dropped 9.8% amid volatility in equity markets, a slowing economy and rising inflation.

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Rand - Dollar
18.88
+0.3%
Rand - Pound
23.85
+0.2%
Rand - Euro
20.37
+0.3%
Rand - Aus dollar
12.31
+0.3%
Rand - Yen
0.12
+0.3%
Platinum
908.05
0.0%
Palladium
1,014.94
0.0%
Gold
2,232.75
-0.0%
Silver
24.95
-0.1%
Brent Crude
87.00
+1.8%
Top 40
68,346
0.0%
All Share
74,536
0.0%
Resource 10
57,251
0.0%
Industrial 25
103,936
0.0%
Financial 15
16,502
0.0%
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