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JSE moves sideways

Johannesburg - Share prices on the JSE moved mostly sideways on Friday as the major indices encountered some resistance after strong moves earlier in the week.

By midday, the All Share-index was only 0.18% higher on 52 557 points while the Top 40-index gained 0.14% to trade at 46 966 points.

A strong resistance level is waiting for the Top 40-index at 47 300 points, but analysts said  the inability of the index to break through this levels is not decisive yet, as the index is still trading above its 65- and 200-day moving averages, which is positive.

Short term traders are currently the main role players on the JSE as long term investors are probably waiting for the market to bottom out.

A typical example is the Resources sector which was 1.66% higher by midday, after losing 2.15% the previous day. This has been the pattern over the past few weeks with swings of 3% to 4% on a daily basis. The Gold index, which is also very volatile, was 0.64% higher.

The Industrial index was unchanged, while the Financial index traded 0.22% lower after performing strongly earlier in the week.

The fundamentals are currently not in favour of a strong run in share prices, with business confidence at historical low levels due to electricity shortages, labour unrest and low commodity prices.
 
Investors are also waiting for the US jobs report due later on Friday, as it will give a better indication of when US interest rates will be raised, with very important implications for the local markets.

A strong jobs report will probably strengthens the case for an interest rate hike in September, which is already discounted by the strong dollar, but after a mixed bag of economic data lately there is a possibility that such a hike will only happen in December.

Higher interest rates in the US will not only attract investments from emerging markets like South Africa back to the US where the risks are perceived to be lower, but strengthen the dollar even further. This will have devastating effects on the value of the rand, inflation and eventually local interest rates which could dampen growth in South Africa.

The volatility of resources shares continued with Kumba [JSE:KIO] gaining 3.96% after dropping more than 6% on Thursday. Lonmin [JSE:LON], which traded more than 7% lower on Thursday, was at midday 0.48% stronger on R8.29.

BHP Billiton [JSE:BIL] gained 1.36% to R235.84 after losing 2.7% on Thursday.

Sasol [JSE:SOL], which is now regarded as an industrial share, was 2.27% higher on R430.80 despite a depressing trading statement. The share price was at one stage about 3.5% higher on R440.29.

Sasol said full-year profit fell as much as 19% after oil prices declined by 33%. Earnings per share excluding one-time items will decline by as much as R11.43 (90 US cents) in the year to June 30 from R60.16 a year earlier.

Old Mutual [JSE:OML], which led the Financial index higher on Thursday with gains of more than 3% after strong results, traded 0.53% lower on R45.09.

Liberty Holdings [JSE:LBH], which announced  a 6% climb in BEE normalised headline earnings to R2bn, representing a 10% growth in operating earnings to R1.3bn, traded 0.59% lower on R142.41.

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Rand - Dollar
18.95
-0.1%
Rand - Pound
23.91
-0.0%
Rand - Euro
20.42
+0.1%
Rand - Aus dollar
12.34
+0.0%
Rand - Yen
0.13
-0.1%
Platinum
908.05
+1.2%
Palladium
1,014.94
+1.3%
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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