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These gains also lifted the rest of the JSE higher as the bargain-hunting which started on Monday, following last week’s sharp losses, continued on Tuesday morning.
Technical analysts said the picture still indicates selling pressure, but a number of indices are quite oversold which is tempting market participants into bargain-hunting at lower levels. This was particularly true for financial shares on Tuesday morning.
By midday the All-share index was another 1.25% higher after gaining more than 1% the previous day, and at midday it traded at 52 194 points. The Top 40 index was 1.37% higher at 46 965 points and has now broken back through resistance levels at 46 200 and 46 800 points.
But Imara SP Reid said in its daily Market Snapshot that the overall index remains below its 200-day moving average and the area at around 52 240 points has taken on technical significance. For a meaningful improvement in the near-term technical picture, the overall index would need to trade beyond this area on solid high volume support.
Besides strong gains in financial share prices, the Industrial index was also 1.37% higher after one of its heavyweights, Naspers [JSE:NPN], reached a new all-time high. The Resources index hardly moved and was 0.05% lower by midday.
Market sentiment worldwide was also much improved from Tuesday morning, after Wall Street shrugged off the negativity from the weekend’s terror attack in Paris. Asian markets followed Wall Street higher, which gave Naspers a boost.
By midday Naspers traded 2.92% higher at a new all-time high of R2 163.48. Tencent, the Chinese internet giant in which Naspers holds a 34% interest, announced strong results last week but the share price did not respond much then as market sentiment was quite negative.
The recovery on Wall Street was boosted by energy shares, on expectations that the war in the Middle East can have a positive influence on the oil price. Sasol [JSE:SOL], which gained more than 3% on Monday, strengthened again on Tuesday morning and gained 2.23% to R412.50. The irony is that Brent crude was still trading at around $44 per barrel.
MTN’s [JSE:MTN] share price fell as much as 8% in early trade on Tuesday morning after Nigeria’s telecommunications regulator said a R74.8bn fine imposed on it for failing to disconnect millions of unregistered mobile phone customers remains in place as it considers the company’s call for leniency.
The share price did however recover during the day and at midday was only 0.13% softer at R144.41. Investors seem to be encouraged by the fact that MTN has won more time to negotiate the penalty, which was due to be paid on November 16. The stock lost more than 8% over the past seven days and more than 20% over the past month.
Old Mutual [JSE:OML] was the star performer in the financial sector and traded 3.06% higher at R43.07. It was one of the busiest shares on the JSE and more than 3.6 million shares were sold for more than R158m. Sanlam [JSE:SLM], which lost 18% over the past three months, traded 3.15% higher at R59.21
More than 6.1 million shares in First Rand [JSE:FSR] changed hands in morning trade and at midday the share price was R48.47. FirstRand was under pressure last week and lost 4.7% over the past seven days.
Investec [JSE:INL] also came to the fore on Tuesday morning and traded 2.03% higher at R110.69.
Sappi [JSE:SAP] continued its strong run supported by solid results, and traded another 2.02% higher at a new 52-week high of R60.75. The market has been discounting the turnaround in Sappi’s fortunes for quite a while now and the share price gained more than 10% over the past seven days and more than 40% over the past month.
At one stage on Tuesday morning Lonmin [JSE:LON] was almost 10% higher after the state-owned Public Investment Corporation (PIC) said it would take up as much as 25% of the company if other investors did not follow their rights in a proposed $407m share sale. By midday the stock was 7.14% higher at R2.52.
The pledge from the PIC, which already owns about 7% of the world’s third-largest platinum producer, comes as shareholders are due to vote this week on whether to proceed with a deeply discounted share issue that will also unlock new debt from banks. Lonmin is reeling from a plunge in metal prices that cut its profit and erased 95% of its market value this year.
