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JSE back on even keel after profit-taking

Johannesburg - Stability returned to the JSE on Wednesday morning after Tuesday’s strong profit-taking, with analysts saying the market is now in an oversold position.

However, resources stocks were still under pressure, although less than before, as there is no economic news to support a rebound in these shares. The losses were however far less dramatic than the previous day.

By midday on Wednesday the All-share index was only 0.08% higher at 52 610 and the Top 40-index traded 0.16% stronger at 47 277 points, just above the important resistance level of 47 200 points that must be held for the market to go forward again.

The mood on the world markets was also better on Wednesday morning, with European and Asian markets delivering a better performance on the latest economic news from China.

Industrial production and investments continued to show slower growth, but the surprise was a better-than-expected performance from retail sales.

European markets are expecting that the European Central Bank will soon announce further stimulus measures to get the Eurozone economy going.

The stronger European markets boosted the big dual-listed stocks on the JSE and SABMiller [JSE:SAB] hit yet another all-time high of R869.69, 1.65% higher than Tuesday night’s close.

The market expects the final details of Anheuser-Busch InBev’s takeover offer for SABMiller later in the day, which will end weeks of speculation as the deadline for the final offer has been extended twice. In the meantime it seems the takeover may not be supported by the Chinese authorities. SABMiller produces Snow, the world’s most popular beer, in a joint venture with a Chinese state company.

By midday Naspers [JSE:NPN] was trading just below an all-time high and was 0.59% higher at R2 209.08. British American Tobacco [JSE:BTI], the biggest share on the JSE, gained 0.27% to R816.46.

MTN's [JSE:MTN] woes continued and the share lost another 0.63% to trade at R152.64.

The resources sector was a mixed picture, with Anglo American [JSE:AGL] gaining 0.99% to R106.40 but BHP Billiton [JSE:BIL] losing 0.68% to R202.49.

The free fall in the share price of Lonmin [JSE:LON], which lost more than 30% on Tuesday on concerns about the company’s ability to survive the platinum price slump, stopped on Wednesday morning. By midday the share was only 0.46% lower at R2.16.

           
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