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After losing more than 1% on Wednesday, bargain hunters came to the fore on Thursday morning and the major indices were modestly higher by midday.
This was however not unexpected and Imara SP Reid technical analysts said in their daily Market Snapshot that the market is oversold, and that gains were possible.
Most market movements on Thursday morning were however very modest and the All-share index traded only 0.31% higher at 51 422, while the Top 40 index lost 0.29% to 46 013.
Imara SP Reid said the Top 40 index is in a consolidation phase and that the index remains in the expected range, with no immediate indication of a breakout soon in any direction.
Of the other indices the Financial index was only 0.39% higher, while the Industrial index increased by 0.46. At that stage the Resources index, which according to Imara SP Reid is particularly oversold, was only 0.06 lower. The index was however quite volatile.
The Resources index is still being influenced by economic concerns over China, a major importer of South African commodities. The market was rattled on Wednesday by the Chinese premier's comments that the government would rather focus on reforming the Chinese economy than stimulating it.
Economists are concerned about the waning effect of steps taken earlier this year to prop up slowing economic growth.
The major concern about the Chinese economy is its effect on commodity prices with the price of iron ore, the basic resource for industrial production, still under severe pressure.
The prices of some iron ore producers are therefore still under pressure and Assore [JSE:ASR], which is already at a 52-week low, lost another 4.57% on Thursday morning to trade at R252.90. This a far cry from the 52-week high of R451.50 reached as recently as March this year.
The share has lost a massive 16.5% over the last seven days and 25.5% over the last month. It is now 36.6% lower than a year ago.
The other major iron producer, Kumba Iron Ore [JSE:KIO], took a breather on Thursday morning and rebounded to gain 0.62% to R287.02. The share lost 10% over the last week and 23.9% over the last month, bringing the past 12 months' loss to 40%.
Anglo American [JSE:AGL], Kumba’s parent company, was 0.16% lower at R265.47. BHP Billiton [JSE:BHP], which has a big iron ore operation in Australia, recovered by 0.56% to trade at R330.55.
AngloGold Ashanti [JSE:ANG], which shocked the market on Wednesday when the share lost more than 14% in reaction to the group’s proposed restructuring, was another 1.10% lower by midday on R142.40, but has been as low as R138.16.
In March this year the share traded at a 52-week high of R209, but lost 20% over the last seven days and 21.3% over the last month.
Industrial conglomerate Bidvest traded vitually unchanged on Thursday morning, after the announcement that it has appointed Barclays and Investec as advisers for a possible listing of its food business on the London Stock Exchange.
Naspers [JSE:NPN], one of Wednesday's big losers on fears over the Chinese economy, bounced back on Thursday and by midday was 1.12% higher at R1 284.95.
- Fin24
