Publications
Partners
After a steep fall through important resistance levels, all the major indices on the JSE rallied sharply on Friday morning and by midday most of the sharp losses of the previous day were recovered.
Technical analysts said Friday morning’s recovery was to be expected because the market was oversold, but they were probably surprised by the strength of the recovery, just as Thursday’s selling happened at a quicker pace than anticipated.
Imara SP Reid said in its daily Market Snapshot on Friday morning that the technical position in the market does not argue for assertive accumulation of shares at current levels, but there will be some bargain-hunting as some equities are much oversold.
Thursday’s losses occurred on high volume, indicating a type of “washout” session with a high level of selling pressure.
However, by midday on Friday the All-share index was again 1.73% higher at 50 125 after losing 1.75% on Thursday. The Top 40 index, which dropped 1.90% to get close to important resistance levels, made up for this on Friday by gaining 1.88% to 44 497.
The big loser on Thursday, the Resource 10 index which dropped 3.27%, gained 2.89% on Friday morning but is still below important resistance levels. By midday the Industrial index was back to where it started on Thursday morning when it gained 1.55%, after losing 1.48% on Friday. Banking shares were 1.26% higher but the Gold index was down for the second consecutive day and traded 1.09% lower.
Thursday’s recovery took place despite a stronger rand, which is normally bad for international companies with business interests around the word.
The rand traded at R10.96 to the dollar by midday on Friday in reaction to the South African Reserve Bank’s decision to hold interest rates at current levels, as there are indications that inflation pressures are decreasing.
READ: Rand holds on to gains on no rate change
The market was also supported by strong world markets, with the Dow Jones and Standard Poor’s 500 indices on Wall Street on new records. European markets and Asian markets also benefited from bargain-hunting after a tough week.
Two of the best performing shares on Friday were iron producers Assore [JSE:ASR] and Kumba [JSE:KIO], by far the worst performing shares on the JSE over the last six months. Assore rose by 6.18% to R265.01, and Kumba gained a massive 7.2% to R265.01.
These gains are exclusively due to investors who feel that stocks have fallen enough and see opportunities.
The strong run on Assore also gave African Rainbow Minerals [JSE:ARM] a lift. The share improved by 5.10% to R131.90, after reaching a 52-week low on Thursday.
BHP Billiton [JSE:BIL], which was also on a 52-week low on Thursday, gained 2.97% on Friday to R287.85. Anglo American [JSE:AGL] was 3.94% stronger at R229.96.
