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Johannesburg - Share prices were again lower on Thursday morning, but the market staged a comeback towards midday.
By mid-morning most of the major indices were lower for the eighth consecutive day, but at that stage the market had recovered more than half of its initial losses. Late on Wednesday it already looked as if the market wanted to stage a recovery, but it opened lower on Thursday and the intraday graph was soon heading south before recovering somewhat.
By mid-morning the All-share index was another 0.38% lower at 52 730 points and the Top 40-index traded 0.45% weaker at 46 673 points. At one stage the All-share index was as low as 52 484 points and the Top 40-index reached 46 427 points.
The Top 40-index, which includes all the big capitalisation shares and is normally regarded as a good barometer of market mood, closed only 0.7% lower on Wednesday after a late rally but on Thursday morning it was again heading for important support levels.
Imara SP Reid said in its daily Market Snapshot that the Top 40-index is now below its 65-day moving average and will soon test important support levels, which must be held for the market to resume upward momentum.
“Near term upside momentum cannot be excluded but over the next 6 to 8 sessions the area at between 45,000 and 46,200 points continues to be a realistic target for the index,” the report said. The Top 40-index was at an all-time high of 48 965 points as recently as the end of April.
Wall Street rebounded sharply on Wednesday after the sharp drop of the previous day, and the European and Asian markets were mixed on Thursday morning as hopes faded for a breakthrough in Greek bail-out negotiations.
European shares had rallied late on Wednesday on reports of a staff-level agreement between Greece and its creditors, but German Finance Minister Wolfgang Schaeuble later said the talks did not show much progress.
This also put a damper on the local market, but investors' attention is currently focused on domestic issues such as weak growth, electricity shortages and political uncertainties.
This week’s poor growth figures for the first quarter emphasised that the local market is expensive and that the average price to earnings ratio of 17 might not be supported by earnings in a depressed economy.
The resources sector is still highly volatile. After closing marginally higher on Wednesday, the Resources 10-index was again the biggest loser on Thursday. It was 1.61% lower by mid-morning, while the Gold index was 0.90% softer. Imara SP Reid said short-term technical indicators suggest likely additional short-term downside.
Resources shares are still being hampered by the strong dollar, which put pressure on commodity prices including gold. Technical analysts said however that the greenback could be marginally weaker over the next few days as it encountered some very short-term resistance at the 65-day moving average.
Among the top resources shares Anglo American [JSE:AGL] was 1.34% lower while BHP Billiton [JSE:BIL] lost 0.79% to R253.79.
The Financial index lost another 0.87% but by mid-morning the Industrial index was only 0.21% higher at 67 215 points. The index is also hovering around its 65-day moving average. Technical analysts said the index must hold above 67 000 over the next few days if further damage is to be avoided.
Naspers [JSE:NPN] staged one of the big recoveries of the morning after it opened more than 1% lower. It was only 0.10% softer at R1 810.86 by mid-morning but traded as low as R1 781.
Mediclinic [JSE:MDC], which lost more than 11% over the past seven days after the market was disappointed with its results, stabilised on Thursday morning and was 0.33% stronger at R105.65.
