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Johannesburg - Selling pressure returned to the JSE on Friday with all the major indices lower, after the technical rebound in the previous session.
Technical analysts said the fact the major indices on the JSE did not clear their 65-day moving averages in Thursday’s recovery, is an indication that that there is still selling pressure.
The selling of the last few days however does not mean the upward trend on the JSE of the last weeks are being reversed as the medium term technical indicators on the All-share- and Top 40-index remain positive.
At midday, the All-share index was 0.56% lower than Thursday’s close on 51 900, while the Top 40-index lost 0.59% to 46 376 points.
The other indices were all moderately lower with the Financial index losing 0.35%, the Industrial index 0.70% and the Resources index 0.69%. The Gold index lost another 4.27% to trade at 818 points, almost half the level of above 1 500 reached in the beginning of the year.
There is also not much support for the JSE from abroad, as Wall Street retreated last night for the third consecutive day after more disappointing company results. Europe and Asia followed Wall Street lower on Friday.
Market sentiment, particularly for commodity shares, was also hampered by more disappointing news on the Chinese economy. Both the Hong Kong and Chinese markets were down after a survey showed the factory sector in China contracted the most in 15 months in July.
China is the biggest market for South African commodities.
The stronger dollar, which reached fresh multi-year highs against some emerging market currencies on Friday, is also bad news for the South African market and local commodity producers.
READ: Dollar hits new multi-year highs
The greenback got a lift as initial claims for US unemployment insurance benefits fell to their lowest level in nearly 42 years last week, which reinforced expectations for a US rate hike before 2016. It can lead to an outflow from emerging markets back to the US where investment risks are perceived to be smaller.
The market’s attention was on Anglo American [JSE:AGL], which announced a drop of 30% in first half earnings. The share price moved however against the rest of the sector and gained 1.8% to R160.02.
A lot of the bad news in the results were probably discounted already, while the company had a good story to tell about containing costs.
Anglo said falling prices were seen across most products ($1.9bn impact), with the realised price of iron ore down 41%, platinum down 19%, copper 18% and HCC down 15%. This was partially mitigated by a solid cost performance and favourable exchange rates.
Some of the other dual-listed commodity producers continued their descent on Friday.
Glencore [JSE:GLN] lost another 1.14% to R42.34 and BHP Billiton [JSE:BIL] was 1.02% softer on R244.99. South 32 [JSE:S32], which was unbundled from BHP Billiton recently, lost 1.05% to trade at R16.05.
Amongst the major industrial shares Naspers [JSE:NPN] lost 2.66% to R1 825.16 and Sasol [JSE:SOL] was 3.07% lower on R415.53 as a result of the weak oil price. British American Tobacco [JSE:BTI] bucked the trend and gained 1.85% to R703.76.
Iliad Africa [JSE:ILA], a supplier of building material traded 1.03% lower on R9.60 after the news that it will be taken over by Steinhoff [JSE:SHF]. The share reached a new 52-week high after a cautionary announcement a few days ago. Steinhoff lost 2% to R78.10.
