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Johannesburg - The All-share index on the JSE is on its way back to below 50 000 points as investors continued to take profits on Tuesday in a market generally regarded as overbought.
More and more investors are cashing in as there is a perception that the current recovery run in share prices has gone too far for now and that some consolidation is needed.
The long-term prospects for at least some sectors are improving, but technical analysts warn that the short-term indicators are incredibly stretched and that some further profit-taking is possible.
Except for the Gold index, which is supported by a run in the gold price which is now the highest in two weeks, all the other major indices were down with the intraday graphs indicating that the losses are gaining momentum.
By midday on Tuesday the All-share index was 0.61% lower at 50 20 points and the Top 40 index lost 0.79% to 44 678 points.
World markets are also under pressure due to poor global growth concerns, particularly after the news that Japan, the world's third-largest economy, is now officially in a recession. The only exception is Wall Street, where worries over the global economy were offset by a hive of acquisition activity.
The global economy is also important for the JSE, as most of the big double-listed companies do business worldwide. The Industrial index, which includes big multinationals like British American Tobacco [JSE:BTI], SABMiller [JSE:SAB], Richemont [JSE:CFR] and Naspers [JSE:NPN], was the biggest loser on Tuesday and traded 0.86% lower.
Naspers, which made the biggest gains last week, lost ground for the second day on Tuesday and traded a further 2.23% down at R1 462.13 after flirting with R1 600 last week.
Resources companies are also dependent on global growth to sustain the market for commodities. These worries have already shaved more than 13 000 points off the Resources index, but despite being exceptionally oversold, the resources index lost another 0.5% on Tuesday.
The Gold index was however 4.72% higher with Sibanye Gold [JSE:SGL] 5.81%, AngloGold Ashanti [JSE:ANG] 5.35% and Harmony [JSE:HAR] 4.24% stronger.
The emphasis on the JSE is now on results, with many of the top companies reporting full-year or interim reports.
Astral [JSE:ARL] produced one of the best sets of results recently with an increase of 99.6% in earnings for the full year due to the rationalisation in the poultry markets, which is eliminating many small competitors. The market rewarded the company with an increase of 1.13% in the share price to R161.50 - a new 52-week high.
Telkom [JSE:TKG] is also back on a 52-week high of R64, 1.67% higher than the previous day after a mixed bag of results. Fixed-line usage and income are still declining, but the company managed to increase earnings without once-off items with 12%.
The share price of PPC [JSE:PPC] took a further knock of 4.42% to R35.76, after announcing flat results for the full year. Investors seem to be concerned about the ongoing spat between the board of directors and the former chief executive Ketso Gordhan. Tuesday's price is a new 52-week low, beating the previous day's low of R26.90.
Group Five [JSE:GRF], which was almost 20% down on Monday after a warning that interim earnings will be more than 20% lower than the corresponding period in the previous year, recovered somewhat on Tuesday. By midday the share price was 0.52% higher at R29.06, but the share price is still very close to the 52-week low of R28.91 set last week.
Retailers are also losing ground after last week's strong run. Mr Price [JSE:MPC] announced earnings growth of 23% on Monday, the tenth year of consecutive growth, but the share price lost 3.61% to R235.16.
Woolworths [JSE:WHL] was 1.61% lower at R80.25.
