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Johannesburg - The remarkable turnaround on the JSE on Tuesday afternoon did not continue on Wednesday morning and by midday most of the major indices were again decisively lower, just as they were at midday on Tuesday.
Analysts expected marginal advances at the start of Wednesday’s trading as the market is still oversold, but the intraday graphs of the major indices showed a distinct downward trend from the outset. It seems profit-takers got the upper hand, selling off the bargains picked up on Tuesday.
But by midday the intraday graphs showed signs of stabilising, just as they did on Tuesday before the strong recovery in late trade which ended the longest run on record of 11 consecutive trading sessions closing lower than the day before.
The All-share index was by Wednesday midday again 1.01% lower at 51 656 points and the Top 40-index traded 1.02% lower at 45 906 points. The All-share index closed 0.21% higher on Tuesday and the Top 40-index gained 0.43. The Top 40-index is now again trading above the important support level of 45 800 points.
At midday on Wednesday the Financial index, which did not share in Tuesday’s recovery, was 0.99% lower and the Industrial index, which was marginally higher on Tuesday, lost another 0.81%. The Resources index, which closed a solid 2.3% in the black on Tuesday afternoon, was at midday on Wednesday again 1.99% lower. Gold had lost 1.00% at that stage.
All the major indices have now lost significant ground if you compare the current situation with the all-time highs reached earlier this year. The Industrial index is now at 65 657 points compared to 69 888 points on April 26, and the Financial index is currently at 16 392 points against a high of 17 9111 points.
The Resources index reached 46 140 points on May 4 this year but only traded at 41 825 points on Wednesday morning. The Gold index lost about a third of its value from the high of 1 513 points on January 29 as it traded at only 1 083 points by Wednesday midday.
Imara SP Reid said in its daily Market Snapshot that Tuesday afternoon’s recovery was a response to the remarkably oversold position of the market.
The improved support materialised at relatively high volume levels, giving the JSE its first realistic opportunity to mount a technical rebound from current levels. The sustainability of the rebound will depend on global market tone over the next two or three sessions.
Wall Street closed marginally lower and the Asian markets also slipped on Wednesday morning on continued uncertainty about Greece’s negotiations with its creditors.
The news that business confidence in South Africa is at the lowest level in 16 years also did not help market mood.
READ: Business confidence slumps to 16-year low
Among the winners was Richemont [JSE:CFR] which traded 0.81% higher at R106.42, while its teammate in the Rupert stable, British American Tobacco [JSE:BTI], gained 0.35% to R661.33.
The strong rebound in the resources sector on Tuesday was due to a slightly weaker dollar and the US currency was still slightly vulnerable on Wednesday morning, but investors sold shares like BHP Billiton [JSE:BIL] and Anglo American [JSE:AGL] on Wednesday as they took profits on the bargains they bought on Tuesday.
BHP Billiton was 2.2% lower at R254.11 and Anglo American lost 1.77% to R193.36.
There was a great deal of interest in the retail sector on Tuesday as solid results by Mr Price [JSE:MPC] started a strong rebound in retail shares. On Wednesday however Mr Price was the victim of serious profit-taking and by midday the stock already traded 4.41% lower at R225.10.
