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Johannesburg - Share prices on the JSE improved on Wednesday morning, but analysts said it was hardly more than a technical rebound as Tuesday’s selling was slightly overdone.
It seems a fair bit of volatility has become the trend as the technical picture for South African shares, according to Imara SP Reid, is less supportive at the moment.
The All-share index at midday was 0.84% higher at 51 187 points and the Top 40 index traded 0.94% up at 45 176 points, but it is crucial that both indices break through and hold resistance areas above this level in the near future, as failure to do so would indicate additional weakness.
Imara SP Reid said in its daily Market Snapshot on Wednesday that the All-share and Top 40-indices are currently both exhibiting descending 65-day moving averages and must hold their ground above these levels.
The Top 40 index can push to 45 560 points in the short term, but must then stay on this level at high volumes for the recovery to continue.
Of the major indices, the Industrial index made the best recovery on Wednesday and traded 1.18% higher at 66 574 points. Analysts warned however that additional selling pressure will materialise and a support area of 64 200 seems to be a realistic short-term target.
British American Tobacco [JSE:BTI] was the big mover in the industrial sector and traded at a new 52-week high of R713.61, beating the previous high of R709.02 set earlier this month. Wednesday morning’s gain represents a jump of 2.56%.
The company announced a 6% decline in first-half earnings, but the market was pleased that the interim dividend of 49.4 pence a share is 4% up on the prior year and in line with analysts’ expectations.
The earnings drop is the result of the strength of the pound which hampered international growth, but excluding currency fluctuations, profit rose 1.3%.
READ: BAT beats expectations, shares up
Richemont [JSE:CFR] also performed strongly and gained 2.22% to R107.25, while Bidvest [JSE:BVT] was 1.14% higher at R303.20. Sasol [JSE:SOL] was only 0.27% higher at R410.50.
Naspers [JSE:NPN], which made a big turnaround on Tuesday when the share price closed over 2% lower after being more than 1% up earlier in the day, stabilised on Wednesday morning and traded 1.38% firmer at R1 763.59.
It was supported by more subdued losses on the Chinese stock markets. The Shangai Composite index was only 0.2% down after the morning session. Naspers has lost 9.64% since the collapse of the Chinese market started.
MTN [JSE:MTN], which was more than 5% down on Tuesday after a profit warning, also recovered on Wednesday and gained 1.29% by midday to R202.88. The share is still 7.7% down for the past seven days and 9.84% over the past 30 days due to concerns about economic conditions in Nigeria, the group’s biggest market.
The financial sector, the biggest loser on Tuesday, was only 0.24% higher on Wednesday.
Most of the attention was on Barclays Africa Group [JSE:BGA], which said first-half profit climbed 9.8% after retail and business banking earnings rose, bad debts declined and it expanded African operations.
READ: Barclays Africa first-half profit up on consumer bank boost
Net income rose to R6.77bn in the six months to end-June from R6.17bn a year earlier. Diluted earnings per share increased 11% to R7.97 and the bank declared an interim dividend of R4.50 per share, 13% higher than the previous year.
The share price however did not respond positively and by midday was 1.19% lower at R184.68 in active trade. It could be that the news has been discounted already, as the stock rose 6.82% over the past 30 days.
Standard Bank [JSE:SBK] was also one of the most active shares and gained 0.34% to R152.01. MMI Holdings [JSE:MMI], which traded 0.66% higher at R28.99, was the busiest share in the insurance sector.
The resources sector traded 0.62% higher. Analysts said it seems resources shares are beginning to find a level, but it is unlikely that this level will improve for quite a while yet.
BHP Billiton [JSE:BIL], the biggest share in that sector, was 0.67% higher at R225.73, but the stock has lost 6.84% over the past seven days and 12.09% over the past 30 days.
