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Johannesburg - The technical rebound on the JSE continued on Thursday morning as optimism about a possible solution for the Greek debt crisis improved the market tone even further.
Analysts warn however that further progress in the debt negotiations will be needed for the improved market sentiment to continue.
By midday on Thursday the All-share index was again above 52 000 points and traded 0.43% higher at 52 184, while the Top 40 index was 0.46% stronger at 46 464 points.
On Wednesday the JSE finally responded to a much oversold position, with most indices enjoying clear and decisive improvement. The overall index traded up by 1.72%, while the Top 40 index was 1.89% higher.
Imara SP Reid said in its daily Market Snapshot that the initial upward reaction on the JSE was amplified by the technically oversold position on a number of indices, but developments in Europe with regard to Greece have created an improved market tone.
European shares rallied strongly on Wednesday and Wall Street also closed higher. European shares continued their rally on Thursday morning.
Greek shares rose 5.6% and its banking index surged 12%, with German Chancellor Angela Merkel saying Greece told its European partners it is committed to intense discussions with its creditors to solve all open issues and avoid a looming default at the end of the month.
"The overall perception is that things might finally start to move, with a deal now more likely in the days ahead than just a few days ago," said Markus Huber, senior analyst at Peregrine & Black.
The talks have been deadlocked over Greece's rejection of creditors' demands for cuts in pensions and unpopular labour market reforms as conditions for releasing frozen bailout funds. Greece will be in default at the end of June without fresh funds to allow it to repay €1.6bn to the IMF.
Imara SP Reid said on Thursday morning that the previous day’s rally on the JE lifted the Top 40 index away from the 200-day moving average and that opens the potential for upside to just beyond 47 080 points This upward momentum can however only be retained if there is further progress in the Greek debt talks.
The big shadow hanging over the markets - rising bond yields in the US which could lead to an outflow of funds from emerging markets back to the US - has not disappeared.
Us bond yields are persistently moving higher and are now trading just shy of 2.5%.
The recent trend of investors pouring money into companies with worldwide interests continued on Thursday morning when more than 8 million shares in Steinhoff [JSE:SHF] were traded for more than R578.9m. Steinhoff, which will soon be listed on the Frankfurt stock exchange, however traded 0.03% softer at R72.61.
Truworths [JSE:TRU] was another retail stock in hot demand and more than 1.4 million shares were sold for over R117m. The share price did not move much and traded 0.16% lower at R83.66.
At midday the Industrial index was 0.44% higher, supported by Naspers [JSE:NPN] which gained 0.87% to R1 830.0 and SABMiller [JSE:SAB] which traded 0.57% higher at R650.00.
The Financial index gained 0.45% and Standard Bank [JSE:SBK] was 0.60% higher at R158.70. FirstRand [JSE:FSR], which was again one of the busiest shares on the JSE, lost 0.43% to R52.81.
The dollar continued to be under technical pressure, which supported resources somewhat. The Resources index gained 0.30% with BHP Billiton [JSE:BIL] 0.67% higher at R260.99. Mondi [JSE:MND] was 0.44% stronger at R273.19.
