Johannesburg - South African shares were again more than 1% higher on Friday by midday, taking heart from strong US growth figures after a torrid week when global markets took fright over China's gloomy economic outlook.
After another strong performance by Wall Street on Thursday, the local markets followed Asian stocks higher after the US reported a surprisingly strong new estimate of economic growth in the second quarter.
The better than expected figures indicated that the global economy, and the USA in particular, might be able to handle the expected slowdown in the Chinese economy better than originally anticipated.
US gross domestic product data was recorded at 3.7%, substantially ahead of an anticipated reading of 3.2%.
By midday the All-share index was 1.03% higher at 49 629 points and the Top 40 index traded 1% higher at 44 061 points. The Industrial index gained 0.89% and the Financial index was 0.64% higher.
The best performers were the gold and resources indices, which gained 4.94% and 2.45% respectively. Some of the shares which were particularly hard hit in the last few weeks recovered strongly.
The market was quite volatile on Friday morning, with the All-share index trading in a range of 0.5%.
According to the technical analysts of Imara SP Reid, the high volatility is an indication that selling pressure might emerge again. The company said in its daily Market Snapshot on Friday that the upside momentum is likely to be less decisive.
The fact that the Top 40 index continues to trade against the backdrop of a descending 65-day moving average argues for additional selling, which will potentially retest the recent lows. Traders are therefore advised to use the strength of the last 48 hours to take profits.
The European markets also gave up most of their early gains on Friday morning, indicating that the recovery is already losing steam.
Among the resources shares that have been under severe pressure lately, Lonmin [JSE:LON] and Impala Platinum [JSE:IMP] continued their strong recovery of the past few days. Lonmin, which gained 24.5% over the past seven days, was another 4.31% stronger at R7.51. The share is however still 56.2% lower over the past 30 days. Impala Platinum traded 5.94% stronger at R49.20, after gaining 8.9% over the previous seven days.
Even Kumba Iron Ore [JSE:KIO], which lost 31% over the previous 30 days, gained 4.31% to trade at R90.88.
The oil price shot up to above $47 per barrel for Brent crude on the back of better growth prospects in the US, which helped Sasol’s [JSE:SOL] share price gain another 3.48% to R415.97.
Glencore [JSE:GLN] was the top performer among the big commodity shares, gaining 4.41% to R30.38. BHP Billiton [JSE:BIL] gained 1.57% to R224.46, and Anglo American [JSE:AGL] was 0.44% better at R147.59.