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After the strong run on Monday afternoon, with all the major indices improving, the market started higher again on Tuesday morning but by midday most of the gains were something of the past.
The only index of note still in the black was the heavily oversold resources sector, but the intraday graph did not indicate an upward mode. After a strong start the index moved mostly sideways and downwards.
Analysts on Tuesday morning said it was probably too much to expect the market recovery to continue as the underlying problems, such as slow economic growth worldwide, low commodity prices and the threat of higher interest rates in the US, still exist.
By midday the All-share index was 0.20% lower at 49 068 points while the Top 40 index gave up 0.23% to trade at 43 382.
The technical analysts of Imara SP Reid said in Tuesday morning’s Market Snapshot that the Top 40 index now needs to challenge the first technical hurdle, at just beyond 44 500 points.
An inability to hold its ground beyond 44 500 points (with brisk volume support) almost certainly indicates the likelihood of additional residual selling pressure.
The Industrial index, also trading below the 60-day moving average, was at one stage almost 1% down but recovered somewhat and at midday was 0.50% lower than on Monday.
The Resources index was still 0.50% higher after recovering strongly on Monday from its exceptionally oversold position. The Financial index was 0.8% lower, with all the major banking shares softer than on Monday.
The resources sector was supported by a weaker rand, which lost ground again on Tuesday morning on news that South Africa's net gold and foreign exchange reserves dipped to $43.329bn in September from $44.24bn in August, according to data from the SA Reserve Bank.
READ: Rand down on foreign reserves dip
The mood on Wall Street was also cautious on Monday as US stocks finished modestly lower, with investors nervous ahead of Wednesday's unofficial kick-off of third-quarter company earnings reports.
This is partly because of fears that the dollar's big rise has hit US profits, said Peter Cardillo, chief market economist at Rockwell Global Capital.
READ: US stocks slip on company earnings fears
On Monday some of the resources stocks which had been severely hit by low commodity prices recovered strongly, but on Tuesday they resumed their downward trend.
Assore [JSE:ASR], which has lost almost 40% of its value over the last month, gained more than 5% on Monday, but by midday on Tuesday it was again 1.07% weaker at R212.76. It is now 50% lower for the year.
Kumba Iron Ore [JSE:KIO] was almost 3% weaker and traded 2.95% lower at R271.48. This share is now 16.8% lower for the month and 40% for the year.
The platinum price, which dropped below $1 200 to the lowest level in 15 months on Monday, recovered somewhat on Tuesday and with it the prices of platinum shares which are currently trading at 52-week lows.
Anglo American Platinum [JSE:AMS] was 1.69% stronger at R361.18, and its holding company Anglo American [JSE:AGL] improved by 2.24% to R248.77. Northam Platinum [JSE:NHM] gained 1.35% to R35.94.
- Fin24
