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JSE runs out of steam after promising start

Johannesburg - JSE share prices started Wednesday like a sprinter racing from the starting blocks, but the market could not maintain the pace.

After the All-share index broke the level of 51 000 points decisively in early morning trade, it gradually lost momentum before recovering somewhat just before midday.

By midday the All-share index was 0.75% higher at 51 092 points and the Top 40-index gained 0.82% to 44 899 points. The Financial index gained 0.59%, the Industrial index 0.83% and the Resources index 1.04%. The Gold index was 1.32% higher, despite a slight drop in the gold price.

The South African market is however performing in contradiction with markets worldwide. All three major US stock indices ended more than 1% lower on Tuesday, with Microsoft losing 9.3% and Caterpillar slipping 7.2% following disappointing company earnings, while the dollar retreated after an unexpected decline in US durable goods orders.

Disappointing company results in the current US earnings period have raised worries about the profit picture given the recent slump in oil prices, weaker global demand and the stronger dollar. Asian markets followed Wall Street lower and the European markets are also concerned about a possible crisis in Greece.

The South African market is already outperforming analysts' expectations. According to the latest survey among CFA Institute analysts, the All-share index will grow only about 2% in 2015.

The institute’s Global Market Sentiment Survey forecasts that the All-share index will end 2015 at 50 829 points. The survey was carried out in October, and at the end of September the index was at 49 336 points.

The survey’s results, which are based on sentiment and not on actual predictions, are heavily influenced by expectations that the South African economy will grow less than 2% in 2015.

But more and more economists are predicting that the sharp oil price drop will dramatically improve the country's economic prospects, with far less pressure on inflation, the deficit on the current account and even on interest rates.

Old Mutual [JSE:OML] predicted in its latest economic report that consumer spending growth will improve from 1.4% to 2.9%.

It is therefore no surprise that retail shares are trading at or close to new 52-week highs. On Wednesday morning Lewis Stores [JSE:LEW] and Clicks [JSE:CLS] both reached new highs.

Lewis Stores gained another 1.31% to a new high of R87.03 after it rose almost 6% on Tuesday on a strong trading report. The company said the acquisition of 63 Beares outlets from Ellerines enabled it to improve sales by 12% in the last quarter of 2014.

Clicks was 4.82 % higher at R91.39, beating the previous best of R87.90. Clicks’ share price has improved by 56.6% over the past 12 months.
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Rand - Dollar
18.87
+0.3%
Rand - Pound
23.86
+0.2%
Rand - Euro
20.37
+0.3%
Rand - Aus dollar
12.31
+0.2%
Rand - Yen
0.12
+0.2%
Platinum
908.05
0.0%
Palladium
1,014.94
0.0%
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
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Industrial 25
103,936
0.0%
Financial 15
16,502
0.0%
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