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JSE sluggish on world market caution

Johannesburg - Share prices moved very little on the JSE on Wednesday morning as the local market echoed world markets' caution in the light of higher bond yields, continued uncertainty about Greece’s financial position and the stronger dollar.

Technical analysts on Wednesday morning said the technical picture for shares still looks good, but an outright build in momentum has been absent as there is a degree of nervousness ahead of the release of the minutes of the last meeting of the Federal Reserve’s open market committee. The accompanying speech by Janet Yellen will be carefully appraised by market participants.

The JSE is highly sensitive to what is expected of US interest rates, as an increase in US rates can lead to a reversal of the current inflow of capital seeking higher yields than the record low rates in the US and other developed countries.

By midday the All-share index was only 0.06% lower at 54 292 points and the Top 40-index lost only 0.09% to 48 099 points. The All-share index dropped almost 0.3% shortly after the opening, but slowly fought its way upwards for the rest of the morning.

The other major indices were also marginally lower, with the Financial index dropping 0.14% and the Industrial index only 0.04%.

The Resources index, which lost more than 3% on Tuesday due to a recovery in the value of the dollar, was only 0.37% lower although the dollar remained at higher levels.

The dollar was boosted by a brisk improvement in housing starts in the US, which were up by 20.2% versus an anticipated improvement of 9.9%.

In its Wednesday morning Market Snapshot, Imara SP Reid said Tuesday’s losses in the resources sector were overdone and it expected some sort of technical support.

The analysts warned however that the resources shares recovery at present provides trading opportunities rather than offering a decisive fundamental investment case. Some volatility can therefore be expected as traders utilise bargain hunting and profit-taking opportunities.

Some stability returned to BHP Billiton's [JSE:BIL] share price and the stock was 0.30% higher at R260.80. South32, the new company which took over some of BHP Billiton’s assets and listed on Monday, was unchanged at R21.70.

Anglo American [JSE:AGL] gained 0.93% to R197.98 but Kumba Iron Ore [JSE:KIO] continued Tuesday’s sharp losses and was another 2.76% lower at R149.75.

The two cellphone giants MTN [JSE:MTN] and Vodacom [JSE:VOD] were among the busiest shares on the JSE on Wednesday morning, and both traded lower. MTN lost 2.81% to R229.16 and Vodacom was 1.22% weaker at R138.29. This is the third consecutive day that Vodacom has lost ground after disappointing results on Monday.

There was brisk trade in Tiger Brands [JSE:TBS] shares. The company announced a mixed bag of results for the six months to the end of March on Wednesday. The share traded 2.10% lower at R302.60.

The company said the results are characterised by a solid performance in the domestic business, which was largely offset by foreign exchange losses arising from the devaluation of the Nigerian naira and a weak performance by the Kenyan business, Haco Tiger Brands.

Spar [JSE:SPP] said first-half profit jumped 22% after the food and liquor retailer acquired its Irish counterpart and sold more lower-priced own-brand products, but the share price did not respond. It drifted lower throughout the morning and by midday was 0.70% weaker at R188.94.

The company bought BWG Group, the owner of the Spar brand in Ireland and southwest England, for R800m in August in an effort to boost growth outside its home market.

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