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Johannesburg - US stocks on Wall Street finished with solid gains on Wednesday and markets worldwide, including the JSE, followed on Thursday morning.
Read: US stocks rally after strong housing report
The gains on the JSE, which was closed for Heritage Day on Wednesday, were however modest after the major indices fell back sharply on Monday and Tuesday.
By midday the All-share index was 0.33% stronger at 50 217, while the Top 40 index gained 0.39% to 45 049. All the other indices did not move much, except for the Gold index which lost more than 2% as the gold price continued its slide.
On Thursday morning the major indices opened higher in reaction to Wednesday’s recovery on Wall Street, but then moved sideways in a narrow range for the rest of the morning's trade.
The Top 40 index is still below the important support level of 45 540 and future movements depend on how quickly the index can recover to above that level.
The recovery on Wall Street was started by a strong housing report. The Commerce Department reported that sales of new single-family houses surged 18% in August to an annual rate of 504 000, their fastest pace in more than six years.
The Dow Jones Industrial Average jumped 0.90%, while the broad-based S&P 500 rose 0.78% and the advanced tech-rich Nasdaq Composite Index advanced 1.03% to 4 555.22. Asian and European markets also followed Wall Street higher.
The housing report "certainly helped the American markets", said Michael James, managing director of equity trading at Wedbush Securities.
"As has proven to be the case for the last 18 months, every pullback lasts a few days and people start buying stocks," James said.
The same could probably be said of the JSE but the major indices have now been trading in a very narrow band of about 1% for about three months. Every improvement in share prices is followed by yet another wave of profit taking.
The Industrial index gained the most and rose by 0.53% by midday, with all the big doubled-listed shares with big market capitalisations edging higher. Even Richemont [JSE:CFR], which reached a series of 52-week lows after a disappointing trading report, recovered on Thursday. The share moved 0.36% higher to R97.06 after setting a new low of R96.43 on Tuesday.
Naspers [JSE:NPN] was 1.78% stronger at R1 287.00 and SABMiller [JSE:SAB] improved by 1.08% to R634.74. British American Tobacco [JSE:BTI] barely moved and increased by only 0.10% to R646.48.
Resources barely moved and the index was 0.10% higher by midday, after BHP Billiton [JSE:BHP] recovered from losses earlier the week, but Anglo American [JSE:AGL] lost further ground. BHP Billiton traded 0.85% higher at R320.33, but Anglo was 0.67% softer at R258.38.
Anglo was pulled still lower by the fall in Kumba Iron Ore [JSE:KIO], which lost another 1.86% to R262.40. As recently as October last year, Kumba was on a 52-week high of R482.00, but has since lost more than 40% or R200 of its value on a weak iron price.
- Fin24
Read: US stocks rally after strong housing report
The gains on the JSE, which was closed for Heritage Day on Wednesday, were however modest after the major indices fell back sharply on Monday and Tuesday.
By midday the All-share index was 0.33% stronger at 50 217, while the Top 40 index gained 0.39% to 45 049. All the other indices did not move much, except for the Gold index which lost more than 2% as the gold price continued its slide.
On Thursday morning the major indices opened higher in reaction to Wednesday’s recovery on Wall Street, but then moved sideways in a narrow range for the rest of the morning's trade.
The Top 40 index is still below the important support level of 45 540 and future movements depend on how quickly the index can recover to above that level.
The recovery on Wall Street was started by a strong housing report. The Commerce Department reported that sales of new single-family houses surged 18% in August to an annual rate of 504 000, their fastest pace in more than six years.
The Dow Jones Industrial Average jumped 0.90%, while the broad-based S&P 500 rose 0.78% and the advanced tech-rich Nasdaq Composite Index advanced 1.03% to 4 555.22. Asian and European markets also followed Wall Street higher.
The housing report "certainly helped the American markets", said Michael James, managing director of equity trading at Wedbush Securities.
"As has proven to be the case for the last 18 months, every pullback lasts a few days and people start buying stocks," James said.
The same could probably be said of the JSE but the major indices have now been trading in a very narrow band of about 1% for about three months. Every improvement in share prices is followed by yet another wave of profit taking.
The Industrial index gained the most and rose by 0.53% by midday, with all the big doubled-listed shares with big market capitalisations edging higher. Even Richemont [JSE:CFR], which reached a series of 52-week lows after a disappointing trading report, recovered on Thursday. The share moved 0.36% higher to R97.06 after setting a new low of R96.43 on Tuesday.
Naspers [JSE:NPN] was 1.78% stronger at R1 287.00 and SABMiller [JSE:SAB] improved by 1.08% to R634.74. British American Tobacco [JSE:BTI] barely moved and increased by only 0.10% to R646.48.
Resources barely moved and the index was 0.10% higher by midday, after BHP Billiton [JSE:BHP] recovered from losses earlier the week, but Anglo American [JSE:AGL] lost further ground. BHP Billiton traded 0.85% higher at R320.33, but Anglo was 0.67% softer at R258.38.
Anglo was pulled still lower by the fall in Kumba Iron Ore [JSE:KIO], which lost another 1.86% to R262.40. As recently as October last year, Kumba was on a 52-week high of R482.00, but has since lost more than 40% or R200 of its value on a weak iron price.
- Fin24
