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After heavy losses during the first two days of the week, the major indices made an attempt to rally on Thursday morning. However, when they failed to breach important resistance levels, the sell-off continued and the market closed at the lowest levels in four months.
Read: Mining shares drag JSE lower
To make matters worse, Wall Street also fell on Thursday which led markets worldwide lower on Friday morning.
Read: Apple losses lead US stocks sell-off
The technical analysts of Imara SP Reid in their daily Market Snapshot on Friday pointed out a major difference between Wall Street and the JSE, as Wall Street's current losses can be described as a meaningful value retracement while losses on the JSE represent a major technical adjustment.
By midday on Friday the All-share index was another 0.43% lower at 49 238 points, after losing 1.1% on Thursday.
The Top 40 index which lost 1.18% on Thursday gave up another 0.48% to 44 135. All the other major indices were down with the Industrial index losing 0.53%, the Resources index 0.45% and the Financial index 0.29%.
After the Top 40 index fell through the important support level of 45 540 points on Tuesday, analysts warned its future potential will be determined by how soon it manages to recover.
However, Thursday's attempt to breach that level again failed completely and Imara SP Reid said the area between 43 200 and 43 000 points is now a realistic target for the foreseeable future.
Wall Street was led lower by Apple, which lost 3.8% because the company is experiencing embarrassing problems with its new operating system as well as criticism that its new iPhones are too easily bent.
Read: Uproar over bendable iPhone
Peter Cardillo at Rockwell Global Capital cited a variety of concerns behind the broader sell-off, including geopolitical issues and weak economic data. There are also concerns that the extraordinarily strong dollar will hit the earnings of US companies which earn a major portion of their income abroad.
Cardillo also pointed to profit-taking as the third quarter draws to a close. "Investors are closing their books and they might be cashing in on a lot of their profits," he said.
On Thursday the JSE sell-off was again led by resources stocks, with the biggest losers the companies that produce basic commodities to the Chinese industrial sector.
Despite better-than-expected Chinese purchasing managers' index figures this week on the manufacturing sector, investors continue to worry about the state of the Chinese economy and Chinese authorities' reluctance to announce further stimulus measures.
Analysts continue to say that resources stocks are oversold, but the downward momentum indicates that the bottom in not yet in sight. The Resources index, which was recently trading at 60 000 points, is now below the significant 53 000 point level.
It really seems as if the share prices of major iron ore producers such as Assore [JSE:ASR] and Kumba Iron Ore [JSE:KIO] are falling down a bottomless pit.
As recently as March 14 Assore traded at a 52-week high of R451.50, but has since lost more than half its value trading a further 3.21% lower on Friday morning at R210.07. The share price has lost an astonishing 35% over the last month and 16.9% over the last week.
Kumba is also still losing ground and gave up another 1.84% to another low of R258.33. Exxaro [JSE:EXX], which holds an important stake in Kumba, lost 1.71% on Friday morning and is also at a 52-week high at R18.47.
Platinum shares are also heading down fast. On Friday morning Anglo American Platinum [JSE:AMS] was 1.59% lower at R367.09.
It is now just above the 52-week low of R362 set last week, after reaching a 52-week high of R510 on April 14 this year in the midst of the prolonged strike in the platinum industry. It has lost 19.6% over the last month.
- Fin24
