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Johannesburg - The worldwide correction on share markets continued on Wednesday morning on the JSE, with all major indices down by more than 0.5%.
The JSE followed Wall Street, which lost ground for the second day in a row on Tuesday night. Markets from all over the world were also lower on Wednesday morning.
The correction in share prices was predicted by some market observers after the strong run the last few weeks which saw markets, including the JSE, reach one record after the other.
By midday on Wednesday the All-share index on the JSE was 0.63% lower at 51 282 points after reaching 52 000 earlier in the week, while the Top 40 index dropped 0.7% to 46 247 points. The indices opened sharply lower and then moved mostly sideways for the rest of the morning.
The biggest loser was the industrial index, which traded 1% lower with all the double listed heavyweights decisively lower.
The pull back in the US is ascribed to concern about valuations in relation with growth prospects, and nervousness ahead of the results season which started on Tuesday, as solid earnings growth is needed to justify current equity price levels.
The tech stocks were again the most volatile on Wall Street. Twitter (-7.0%) led a plunge in tech stocks, which saw big losses in Facebook (-3.9%), Netflix (-3.4%) and Google (-1.9%).
The reporting season on Wall Street however started on a positive note on Tuesday evening when Alcoa reported net income of $138m, up from $119m loss in the year-ago period. That translated into earnings of 18 cents per share, 6c above expectations. Alcoa shares gained 1.5% in after-hours trading.
Investors are also concerned about the prospects of US interest rates - at record lows at the moment - rising faster than expected if US economic data continues to surprise on the upside, after last week’s jobs data was much better than expected.
On the JSE the prices of the shares with the big market capitalisations, which are favoured by overseas investors, were all lower on Wednesday morning.
Naspers [JSE:NPN] lost 2.11% to R1 300 on Wednesday morning and SABMiller [JSE:SAB] traded 1.17% lower at R599.65.
Richemont was 0.94% lower at R107.87, while British American Tobacco [JSE:BAT] was 0.82% weaker at R650.
In the resources sector Anglo American [JSE:AGL] lost 0.36% to R275.90 and BHP Billiton [JSE:BIL] 0.76% to R361.50.
Poultry profits from rosier prospects
One of the surprises on the JSE was the performance of food companies, particularly chicken producers, which were under pressure for most of the year.
The prospects for these companies have improved dramatically with the introduction of import levies on chicken products from Europe, and Astral [JSE:ARL] and Sovereign Foods [JSE:SOV] both reached new 52-week highs on Wednesday morning for the second day in a row.
Astral improved by 3.25% to R135.20 while Sovereign Foods was 1.12% higher at R8.35. The share price has risen from R5.50 to R8.35 over the last 60 days.
Some retail shares are also doing remarkably well. Woolworths traded 1.28% higher at R79.00, only 10c lower than the record set on July 1 this year.
Its Australian subsidiary, Country Road, said it expected full year earnings to rise as much as 66%.
- Fin24
The JSE followed Wall Street, which lost ground for the second day in a row on Tuesday night. Markets from all over the world were also lower on Wednesday morning.
The correction in share prices was predicted by some market observers after the strong run the last few weeks which saw markets, including the JSE, reach one record after the other.
By midday on Wednesday the All-share index on the JSE was 0.63% lower at 51 282 points after reaching 52 000 earlier in the week, while the Top 40 index dropped 0.7% to 46 247 points. The indices opened sharply lower and then moved mostly sideways for the rest of the morning.
The biggest loser was the industrial index, which traded 1% lower with all the double listed heavyweights decisively lower.
The pull back in the US is ascribed to concern about valuations in relation with growth prospects, and nervousness ahead of the results season which started on Tuesday, as solid earnings growth is needed to justify current equity price levels.
The tech stocks were again the most volatile on Wall Street. Twitter (-7.0%) led a plunge in tech stocks, which saw big losses in Facebook (-3.9%), Netflix (-3.4%) and Google (-1.9%).
The reporting season on Wall Street however started on a positive note on Tuesday evening when Alcoa reported net income of $138m, up from $119m loss in the year-ago period. That translated into earnings of 18 cents per share, 6c above expectations. Alcoa shares gained 1.5% in after-hours trading.
Investors are also concerned about the prospects of US interest rates - at record lows at the moment - rising faster than expected if US economic data continues to surprise on the upside, after last week’s jobs data was much better than expected.
On the JSE the prices of the shares with the big market capitalisations, which are favoured by overseas investors, were all lower on Wednesday morning.
Naspers [JSE:NPN] lost 2.11% to R1 300 on Wednesday morning and SABMiller [JSE:SAB] traded 1.17% lower at R599.65.
Richemont was 0.94% lower at R107.87, while British American Tobacco [JSE:BAT] was 0.82% weaker at R650.
In the resources sector Anglo American [JSE:AGL] lost 0.36% to R275.90 and BHP Billiton [JSE:BIL] 0.76% to R361.50.
Poultry profits from rosier prospects
One of the surprises on the JSE was the performance of food companies, particularly chicken producers, which were under pressure for most of the year.
The prospects for these companies have improved dramatically with the introduction of import levies on chicken products from Europe, and Astral [JSE:ARL] and Sovereign Foods [JSE:SOV] both reached new 52-week highs on Wednesday morning for the second day in a row.
Astral improved by 3.25% to R135.20 while Sovereign Foods was 1.12% higher at R8.35. The share price has risen from R5.50 to R8.35 over the last 60 days.
Some retail shares are also doing remarkably well. Woolworths traded 1.28% higher at R79.00, only 10c lower than the record set on July 1 this year.
Its Australian subsidiary, Country Road, said it expected full year earnings to rise as much as 66%.
- Fin24
