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Johannesburg - The JSE started sharply higher on Friday morning, indicating that the technical rebound expected by investors for a few days now is finally happening.
The major indices however gave up about half of these gains in a very short time, before the market started edging slowly upwards again.
By midday the All-share index was 0.89% higher at 48 618, while the Top 40 index gained 0.95% to 43 364.
Among the other indices the Industrial index gained a solid 1.34%, with the Financial index 0.54% stronger and the much-maligned Resources index 0.41% higher. The Gold index however lost another 0.94% with the gold price still abdicating before the strong dollar.
Analysts said the rebound was to be expected given that the market was exceptionally oversold, but such a rebound may not last long.
Friday morning’s rebound was in reaction to Wall Street, which on Thursday recovered most of the day’s losses in afternoon trade after better than expected initial jobless claims figures.
Initial jobs claims dropped decisively below 300 000 at 287 000, the lowest in several months. This led to expectations that US jobs data be announced on Friday would be good, which supported the market in late trading.
Expectations are that the US last month created more than 210 000 jobs, after last month’s disappointing figure of 142 000.
The European markets also rebounded strongly on Friday morning, after Thursday's sharp fall when the European Central Bank’s statement on monetary policy did not reveal exciting new developments.
Imara SP Reid said in its daily Market Snapshot that markets - including the JSE - are exceptionally oversold and that a rebound is to be expected, but that the momentum indicators are still negative and such a rebound could be short-lived, particularly if the latest US jobs data disappoints.
“Investor sentiment worldwide is currently undermined by the strength of the dollar and macro-economic weakness in a number of global regions. Recent US trade figures have been marginally less robust than anticipated, European figures have been decidedly disappointing and economic statistics from Japan and China have also been more muted than expected.”
Manufacturing purchasing managers' index data in China announced on Friday morning proved to be slightly weaker than anticipated at 54.0, although the figure still represents expansion - just at a slower pace than in previous months.
The JSE's spotlight is again on the Top 40 index which fell through the support level of 43 800, and trend indicators have taken on a negative bias.
Imara SP Reid said however that the index is exceptionally oversold and a technical rebound is bound to happen. Technical analysis indicates that the index can rebound towards 44 280 in the next few days.
The 200-day moving average is also providing strong support.
Naspers [JSE:NPN] was responsible for the big rebound in the industrial sector on Friday morning when it gained 4.7% to R1 243.20, after the share lost almost 10% over the past week on concerns about the political problems in Hong Kong. Naspers earns most of its income from Hong Kong-listed Chinese internet giant Tencent, in which it holds a 34% stake.
SABMiller [JSE:SAB] was only 0.42% higher at R605.75, while Richemont [JSE:CFR] improved by 0.54% to R91.00, after it set a new 52-week low of R90.51 on Thursday. Richemont is also dependent on Asia and China for sales growth, where things are not going as well as they should.
In the resources sector platinum shares are still under pressure with Anglo American Platinum [JSE:AMS], Northam Platinum [JSE:NHM] and Lonmin [JSE:LON] all trading at 52-week lows.
Amplats was 1.67% lower on a new record low of R352.51 after trading as recently as April on a 52-week high of R510.00. Lonmin lost a massive 3.19% to R30.74.
Northam was at one stage at a new low of R33.70, but recovered and by Friday midday traded 0.96% higher at R36.00.
- Fin24
The major indices however gave up about half of these gains in a very short time, before the market started edging slowly upwards again.
By midday the All-share index was 0.89% higher at 48 618, while the Top 40 index gained 0.95% to 43 364.
Among the other indices the Industrial index gained a solid 1.34%, with the Financial index 0.54% stronger and the much-maligned Resources index 0.41% higher. The Gold index however lost another 0.94% with the gold price still abdicating before the strong dollar.
Analysts said the rebound was to be expected given that the market was exceptionally oversold, but such a rebound may not last long.
Friday morning’s rebound was in reaction to Wall Street, which on Thursday recovered most of the day’s losses in afternoon trade after better than expected initial jobless claims figures.
Initial jobs claims dropped decisively below 300 000 at 287 000, the lowest in several months. This led to expectations that US jobs data be announced on Friday would be good, which supported the market in late trading.
Expectations are that the US last month created more than 210 000 jobs, after last month’s disappointing figure of 142 000.
The European markets also rebounded strongly on Friday morning, after Thursday's sharp fall when the European Central Bank’s statement on monetary policy did not reveal exciting new developments.
Imara SP Reid said in its daily Market Snapshot that markets - including the JSE - are exceptionally oversold and that a rebound is to be expected, but that the momentum indicators are still negative and such a rebound could be short-lived, particularly if the latest US jobs data disappoints.
“Investor sentiment worldwide is currently undermined by the strength of the dollar and macro-economic weakness in a number of global regions. Recent US trade figures have been marginally less robust than anticipated, European figures have been decidedly disappointing and economic statistics from Japan and China have also been more muted than expected.”
Manufacturing purchasing managers' index data in China announced on Friday morning proved to be slightly weaker than anticipated at 54.0, although the figure still represents expansion - just at a slower pace than in previous months.
The JSE's spotlight is again on the Top 40 index which fell through the support level of 43 800, and trend indicators have taken on a negative bias.
Imara SP Reid said however that the index is exceptionally oversold and a technical rebound is bound to happen. Technical analysis indicates that the index can rebound towards 44 280 in the next few days.
The 200-day moving average is also providing strong support.
Naspers [JSE:NPN] was responsible for the big rebound in the industrial sector on Friday morning when it gained 4.7% to R1 243.20, after the share lost almost 10% over the past week on concerns about the political problems in Hong Kong. Naspers earns most of its income from Hong Kong-listed Chinese internet giant Tencent, in which it holds a 34% stake.
SABMiller [JSE:SAB] was only 0.42% higher at R605.75, while Richemont [JSE:CFR] improved by 0.54% to R91.00, after it set a new 52-week low of R90.51 on Thursday. Richemont is also dependent on Asia and China for sales growth, where things are not going as well as they should.
In the resources sector platinum shares are still under pressure with Anglo American Platinum [JSE:AMS], Northam Platinum [JSE:NHM] and Lonmin [JSE:LON] all trading at 52-week lows.
Amplats was 1.67% lower on a new record low of R352.51 after trading as recently as April on a 52-week high of R510.00. Lonmin lost a massive 3.19% to R30.74.
Northam was at one stage at a new low of R33.70, but recovered and by Friday midday traded 0.96% higher at R36.00.
- Fin24
