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Johannesburg - Share prices on the JSE recovered somewhat on Friday morning after disappointing news on economic growth in the US in the third quarter allayed fears of an increase in US interest rates.
The JSE is currently underpinned by overseas investors using the cheap money that is available in the developed world to invest in the JSE’s big double listed shares. Those investments can come to an end if US interest rates increase.
The Federal Reserve hinted earlier this week that such a hike could be announced as soon as December, but they might think again after Thursday’s growth figure for the third quarter. The Commerce Department reported that third-quarter US economic growth slowed to an annual rate of 1.5% - down from 3.9% in the second quarter.
By midday on Friday the All-Share-index on the JSE was 0.72% higher on 53 791, which meant the index was at that stage only about 400 points lower than last Friday, despite some profit taking earlier in the week. The Top 40-index was back again above 48 000 points and traded 0.80% higher on 48 327 points.
The industrial index was 0.79% higher and the financial index 0.52% higher, while the resources index recovered some of Thursday’s big losses by gaining 1.19%.
The technical analysts of Imara SP Reid said the losses earlier this week was marginally overdone and this also supported the market. It warned, however, that Friday’s improvement does not negate the likelihood of a value retracement in the next 8 to 10 sessions. A realistic appraisal still suggests that marginal profit-taking and residual selling pressure is the most likely outcome from current levels.
The top shares on the JSE, which underpinned the market lately, continued their steady upward path on Friday morning with SABMiller [JSE:SAB], British American Tobacco [JSE:BTI] and Richemont [JSE:CFR] all reaching new 52 week highs. SABMiller was 0.48% stronger on a new high of R843.93, while Richemont edged only 0.07% higher to R118.03 to beat the previous best.
British American Tobacco, which announced strong results earlier this week in a management report, traded 0.34% stronger on a high of R822.24. Naspers gained 1.13% to R2 023.00 and Sasol 1.77% to R447.65.
Kumba, which suffered heavy losses on Thursday, started trading even lower on Friday morning before bargain hunters helped the share price 6.02% higher to R60.20. At one stage, the share price, which was 54% lower for the year to date before Friday, traded as low as R54.01.
Iron ore prices dropped below the psychological level of $50 a metric tonne and are 12% lower in October, on course for the biggest monthly fall since March. Analysts said the price might decline to between $40 and $45.
Impala Platinum, which lost more than 8% on Thursday, traded another 1.83% lower on a new 52-week low of R36.98, after the company announced that production fell 11% in the third quarter due to maintenance and safety stoppages. The share lost half of its value in the year to date.
Bargain hunters also pushed MTN’s share price higher after four consecutive days of declines in which the share price lost 15% of its value. The share price dropped initially to a new low of R153.01, but was 1.92% stronger on R157.34 by midday.
MTN said on Friday morning it is engaging with Nigerian authorities after the country’s telecommunications regulator imposed a record fine of R71bn on Africa’s largest phone company for failing to disconnect unregistered SIM cards. The fine must be paid by November 16.
There was interest in retail shares with heavy volumes. Woolworths gained 0.89% to R102.15 and Shoprite traded 0.06% or 9c above Thursday’s 52 week low at R144.66. Truworths was 2.23% higher on R93.64. Woolworths and Truworths are both close to 52 week highs.
