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Resources shares made a strong run over the previous three sessions but analysts warned that the run was mainly a technical correction from a hopelessly oversold position and that the fundamental conditions in the resources market did not change much, except for a weaker rand that helped soften the blow of record low commodity prices.
This proved to be true on Tuesday as the Resources index was more than 2% lower by midday and the Gold index lost more than 3.5% at that stage.
The Financial and Industrial indices made modest gains and that helped to ensure that the overall indices were only slightly lower than the day before.
By midday on Tuesday the All Share-index was 0.11% softer on 50 430 points and the Top 40-index lost 0.18% to 45 079 points. The Financial index improved with 0.5% and the Industrial index with 0.49%.
In the previous sessions the softer rand helped to lift resources shares, as companies receive more for their exports in the local currency. But on Tuesday, the fact that the rand weakened further to R11.31/$ had little influence.
Tuesday morning's selloff came as a surprise, as a technical analyst said that technical considerations remain favourable for resources shares, particularly from a trading perspective.
In contrast to Monday, when they were the star performers, gold and platinum shares were under a lot of pressure on Tuesday.
Anglogold Ashanti [JSE:ANG] must now be one of the most volatile shares on the JSE with moves of more than 5% on a single day a regular occurrence.
By midday on Tuesday, the share price was 5.48% lower on R106.65, after it became known that the company plans to cut staff through voluntary severance packages, according to a company memo seen by Reuters
Applications will open on Tuesday and the company wants to cut jobs in overstaffed areas, with a preference given to employees who are over 55 years old, according to the memo.
Harmony [JSE:HAR] dropped 4.14% to R16.92 and is now trading again at a new 52-week low.
The gold price traded at $1 151 per fine ounce, despite a report from the World Gold Council that indicated that the demand for gold in China for jewellery and investment use will increase with 25% over the next three years to 1 350 tons.
In the platinum sector Anglo American Platinum [JSE:AMS] lost 3.39% to R360.05 and Lonmin [JSE:LON] gave up almost all Monday's gains after a solid earnings report when it dropped 2.94% to R33.96.
Amongst the heavyweights Anglo American [JSE:AGL] was 2.93% lower on R237.10 and BHP Billiton [JSE:BIL] traded 1.93% softer on R295.14.
