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Johannesburg - The dramatic rise of almost 20% in SABMiller's [JSE:SAB] share price on Wednesday gave the JSE an artificial push, but the gains did help to establish upward momentum which continued on Thursday.
The JSE was also boosted by world markets which edged to a three-week high on Thursday, while the dollar drifted lower against other currencies as investors consolidated positions ahead of a nail-biting US Federal Reserve interest rate decision.
All the major indices on the JSE were up by midday, although most of them traded much higher in earlier trade.
The sharp rise in SABMiller stocks on news of a possible takeover by Anheuser-Busch InBev pulled the major JSE indices way above important resistance levels on Thursday, which established some momentum.
The sustainability of the momentum will depend on how the markets react to the US Federal Reserve’s interest rate decision, but profit takers for once stayed away on Thursday morning with Wednesday's big gainers all rising further.
By Thursday midday the All-share index was 0.86% higher at 51 567 points, but the index earlier traded above 52 000 at 52 019 points. The same goes for the Top 40 index, which was 0.89% higher at 45 994 after trading well above 46 000 at 46 574 points earlier in the day.
The stronger rand, which broke through the important resistance level of R13.40 to the dollar to trade at R13.35 by midday, gave financial shares a boost and the index was 1.38% higher. The Resources index traded 1.55% stronger and the Gold index was 2.61% up on the back of a softer dollar.
Analysts said there is a sense of relief that after months of market speculation and advice from almost everyone from the International Monetary Fund to the heads of top global companies, the wait for the Fed's verdict would be over by 20:00.
"We think it is going to be a very close call (for the Fed)," said Stephen Chiu, a strategist at Mitsubishi UFJ Financial Group in Hong Kong. Weak US inflation data strengthen the argument for the Fed to hold its fire with a rise in interest rates, which would be the first since 2006.
Chiu said the Fed would also be careful not to signal any excessive tightening, given that global markets are still very vulnerable.
The big performers on Wednesday, SABMiller and Richemont [JSE:CFR], which gained more than 6% on strong sales figures, strengthened further on Thursday as profit takers stayed away for a change.
By midday SABMiller was another 1.11% stronger at R747.22 and Richemont had gained 0.14% to R106.29.
British American Tobacco [JSE:BTI] gained 2.07% to R749.88, but by midday Naspers [JSE:NPN] was 0.10% softer at R1 733.26.
A sharp rise in the oil price also benefited the markets, and Sasol [JSE:SOL] gained 1.85% to R425.73.
Oil prices were trading higher on Thursday morning in Europe, but gains were capped ahead of the release of official data later on Wednesday.
Among the financial shares FirstRand [JSE:FSR] traded 1.15% higher at R52.85 and Standard Bank [JSE:SBK] was 1.53% stronger at R143.74. Sanlam [JSE:SLM], which has been under pressure lately and reached a new 52-week low last week, recovered strongly and traded 1.91% higher at R62.60.
Old Mutual [JSE:OML] was 0.69% higher at R40.86.
