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Resources keep JSE afloat

Johannesburg - Share prices on the JSE were still slightly higher by midday on Friday, but that did not give the full story of the morning’s trade.

The intraday graph of the All-share index and Top 40-indices shows a steady downward move for most of the morning after the indices opened sharply higher.

The market would have been lower if it was not for the Resources index which is still holding onto the initial gains for most of the morning.

It seems that the Commodities index, which offers according to analysts good buying opportunities, is now mainly driven by what is happening to the very volatile oil price – with Sasol [JSE:SOL] the leader in the market.

After a sharp drop on Thursday in reaction to the oil price’s recent run losing steam, the share gained more than 3% on Friday morning when the price of crude traded higher again.

By midday on Friday, the Resources index was 1.16% higher which helped the All-share index to be just 0.01% higher on 51 693 points. The Top 40-index was only 0.02% stronger on 45 461 points.

All the major indices were lower with the volatile Gold index losing 0.72%, the Industrial index 0.33% and the Financial index only 0.08%.

Traders said the volatile trading in the oil market will continued unabated with dealers divided on whether the beaten-down commodity has bottomed out. Brent traded at $57.11 in late morning trade.

"Oil's continuing whipsaw has largely been motivated by news surrounding inventory and supply side numbers," said Nicholas Teo, market analyst at CMC Markets in Singapore.

Later tonight new numbers will be released on the number of oil rigs in operation. Last week's data showed a record drop of 94 oil rigs to 1 223 for the week ended January 30. That compared with 2 393 a year ago.

The drop, coupled with announcements of deep cuts in capital spending by major oil companies including BP and BG Group, has suggested there will be tighter supplies in the future.

When Opec decided not to curtail production to support the oil price the organisation hoped that a low oil price would squeeze high cost production out of the market. That seems to be happening now.

Sasol [JSE:SOL], which traded at R464.60 this morning, has gained 8.3% over the last seven days. BHP Billiton [JSE:BIL] gained 1.03% to R265.80.

Steinhoff [JSE:SHF] was again one of the busiest shares on the market with 4.05 million shares changing owners for a value of R26.8m. The share is still supported by the recent transaction in which the group acquired more than 93% of Pepkor.

Steinhoff is after the transaction now one of the biggest shares on the JSE with a market value of more than R161bn.

The share gained 1.54% on Friday morning and is now 5.1% higher for the week. Over the past year the share price increased with 34.4%.

Two of the defensive shares which fell out of favour recently as investors climb into commodity, retail and banking shares, were back in the news this morning. Netcare [JSE:NTC] gained 2.78% to reach a new 52-week high of R40.60 and the share is now 77.1% higher for the year.

Telkom [JSE:TKG] is also at a new high of R76.79 after the share price gained 2.93% this morning. That means that investors have earned a return of 145.9% over the past twelve months.

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