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Johannesburg - Share prices on the JSE drifted mostly lower on Monday as investors took limited profits after the strong surge towards the end of last week.
All the major indices strengthened initially but then started to lose ground, with the Financial and Industrial indices slipping back into negative territory. The Resources and Gold indices were still higher, but lower than earlier in the day.
Analysts said more sobering news on the state of the Chinese economy dampened the euphoria after the Bank of Japan’s announcement that it would implement negative interest rates, and indications that the central banks of Europe and China will also announce stimulatory measures.
By midday the All-share index and Top-40 index were both about 1% lower than the peaks earlier in the day.
The All-share index, which ended the month of January 3% lower, was at that stage 0.38% softer on 48 956 points. The Top-40 traded 0.49% lower on 43 498 points.
The Financial index gave up 0.91% and the Industrial index 0.73%, while Resources and Gold gained 0.91% and 2.4% respectively.
One of the big losers of the day was MTN [JSE:MTN] (-8.27% to R127.96), after gaining more than 27% in the previous seven days.
MTN earns a major part of its income from Nigeria, which have been struggling amid the plummeting oil price. Nigeria is seeking financial assistance from the World Bank and International Monetary Fund to balance its budget.
Cliff Tan, head of global markets research with Bank of Tokyo-Mitsubishi UFJ, said on Monday the surprise move by the Bank of Japan will be a catalyst for global equities on the short term, but it only underlines the weakness of the global economy and strong economic data is needed for a sustainable rally.
Monday's batch of economic data from China added to worries about the health of the economy.
Activity in China's manufacturing sector contracted at its fastest pace in almost three-and-a-half years in January, missing market expectations, while growth in the services sector slowed, official surveys showed on Monday.
The Shanghai Composite Index fell more than 2%, while markets elsewhere in Asia were also cautious. January was the worst monthly performance for the Shanghai market since the 2008 crisis with more than a 10% loss.
Major European markets were also marginally lower. Analysts say the fact that central bankers in Asia and Europe are considering a softer monetary stance is evidence of their concern about a lack of economic activity. If they do not act decisively soon, it could hurt the markets.
The local market is also waiting to see what will happen on Wall Street, where the results season for the first quarter will start this week. This usually gives an indication of the health of the American economy and corporate sector.
Although the US Federal Reserve is still committed to gradually raise interest rates this year, Federal Fund rate futures are pricing in barely one hike this year as policy makers are concerned about the influence of a weak global economy and market volatility on the US economy.
The rand was still trading below R16.00/$ on Monday after dipping below this level for the first time since January 6 on the back of the hike in local interest rates and surprisingly good trade data on Friday.
By midday on Monday the rand was trading at R15.95/$ compared to R15.89 on Friday night in New York.
This is not necessarily good news for gold shares but the Gold index was supported by a higher gold price, which traded almost $4 higher on $1 121 per fine ounce.
Harmony [JSE:HAR] and DRD Gold [JSE:DRD] were again the star performers. Harmony, which gained 122.4% over the previous 30 days, was at midday another 6.39% higher on R30.96. DRD Gold gained 5.44% to R4.65.
Sibanye [JSE:SGL] was one of the busiest shares on the JSE, with 1.46 million share changing hands for more than R52m, but the share price lost 0.03% to R34.39.
Arcelor Mittal [JSE:ACL] was one the strong performers in the Resources sector gaining 4.83% to R6.29. The share is now 24.75% higher over the previous seven days and 87.5% over the previous month. Anglo American [JSE:AGL] was 1.87% higher on R64.18.
FirstRand [JSE:FSR] lost 1.7% to R43.96 and Standard Bank [JSE:SBK] traded 0.52% softer on R111.63.
British American Tobacco (BAT) [JSE:BTI], Bidvest [JSE:BVT] and Reinet [JSE:REI] all traded at new intraday 52-week highs, before losing ground later in the morning. BAT reached a new intraday high of R885.21 to beat the previous best of R884.55, but was at midday only 0.74% stronger on R880.54.
Bidvest was 0.48% softer on R363.00 but traded earlier at a new high of R368.69, beating the previous best of R364.74. Reinet also reached a high of R33.95 before it dropped back to trade 0.03% softer on R32.99.
