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JSE takes a breather

THE JSE took a breather on Tuesday morning and analysts said the upside potential for the immediate future is limited after the strong recovery run of the last few days.

The local market took its lead from world markets with Wall Street also digesting the highs of last week while waiting for the results of the American midterm selections, in which President Barack Obama's Democratic Party is likely to lose control of both houses of the American Congress.

By midday the All-share index was 0.18% lower at 49 932 points after breaching the 50 000 level earlier in the day, while the Top 40 index lost 0.24% to 44 600. Both indices were fairly volatile on Tuesday morning, moving up and down in a range of about 0.60% on the intraday-graph.

Although the current recovery run came to a temporary halt, the local market is in much better shape than two weeks ago with the major indices breaching important resistance levels. The Top 40 index in particular is now 1 000 points above the significant level of 43 600, regarded as a major stumbling block for any sustainable recovery.

The technical analysts of Imara SP Reid said in their daily Market Snapshot the Top 40 index has established a technical position beyond its 200-day moving average but has yet to clear the 65-day moving average. A move back beyond the 65-day moving average accompanied by a reversal in this indicator would indicate much improved short-term prospects, but this is unlikely to develop in the next session or two.

The Financial index, one of the stars of the recent recovery, was 0.29% weaker and Imara SP Reid said these shares are still overbought and investors with trading positions should consider profit taking. The Resources index was the biggest loser on Tuesday, shedding 0.41% after a bit of sector rotation and bargain hunting gave it a big lift on Monday.

Imara SP Reid said the prospects for global commodities are still challenging due to below-average demand. The strong dollar also played a role in inhibiting positive price outcomes. The shares of commodities producers such as iron ore were again under pressure on Tuesday morning.

Assore [JSE:ASR], which lost more than 48% of its value over the last six months, shed 2.6% to trade at R210.75. Kumba Iron Ore [JSE:KIO] was 1.22% weaker at R277.94 and is now 25% lower over the last six months. Anglo American [JSE:AGL] was only 0.14% lower and BHP Billiton [JSE:BIL] lost 0.52% to R286.00.

The Gold index, which dropped to the lowest level since 2001 on Friday, continued its technical recovery with a gain of 2.35%. AngloGold Ashanti [JSE:ANG], which gained more than 12% on Monday after announcing plans to reduce its debt, was another 3% higher at R107.50. Last Friday the share traded at a 52-week low of R93.50.

The Industrial index, which was 0.17% lower by midday, will probably take its lead from Wall Street on Tuesday afternoon after the US market ended flat on Monday on a mixed bag of economic indicators and uncertainty about the midterm elections.

The Institute for Supply Management's purchasing managers' index for October manufacturing rose to 59.0, with companies saying activity is picking up more than expected going into the year-end holiday shopping season. But the Commerce Department reported on Monday that US construction spending fell for a second straight month in September at a 0.4% annual decline, surprising analysts who expected a pick-up.

Among the major shares in the Industrial index, Richemont [JSE:CFR] was once again under pressure and lost 2.36% to R90.84. Naspers [JSE:NPN] was 0.86% lower at R367.17 and SABMiller [JSE:SAB] traded 0.48% lower at R618.99.

 - Fin24
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Rand - Dollar
18.94
-0.0%
Rand - Pound
23.91
-0.0%
Rand - Euro
20.41
+0.1%
Rand - Aus dollar
12.33
+0.1%
Rand - Yen
0.13
-0.0%
Platinum
908.05
+1.2%
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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