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Johannesburg - Share prices on the JSE recovered on Thursday, in line with markets worldwide as investors used the sharp drops of the previous two days to pick up bargains.
There was some good news that took the sting out of the latest Brexit scares but the overall picture did not change much, which means that the latest rebound in share prices is mainly technical. Markets are still lower than the levels they were at before Britain voted to leave the European Union.
That was also the situation on the JSE, where the biggest losers on Wednesday have also been Thursday's biggest winners.
The Financial index, which traded more than 2.7% lower on Wednesday, at mid-morning on Thursday was already 1.98% stronger. The Gold index, which gained more than 6% on Wednesday, was the only index that lost ground on Thursday and at mid-morning was 0.99% down, despite a higher gold price.
As a result, the All-share index was 1.20% higher at 51 420 points and the Top 40 index traded 1.29% stronger at 45 074 points. The Industrial index gained 0.80% and resources stocks 1.99%.
The recovery in share prices started last night in New York, where sentiment received a welcome lift from a survey showing activity in the giant US service sector hit a seven-month high in June as new orders surged and companies hired more.
Minutes from the US Federal Reserve's June policy meeting also confirmed what was already suspected - that policy makers decided in June that interest rate hikes should stay on hold until they have a handle on the consequences of Britain's vote on EU membership.
Asian and European stocks rebounded from one-week lows as oil rallied after private data showed another drop in US inventories. At mid-morning Brent crude oil traded at $49.10 per barrel.
The Stoxx Europe 600 Index rose for the first time this week, but the index remains around 7% down since the June 23 vote in favour of Brexit, with banking and property stocks particularly affected.
Concern about a possible drop in commercial property prices is still on the increase and trade in seven British property funds are now suspended after a wave of selling, leaving over £18bn frozen in the biggest seizing up of investment funds since the 2008 financial crisis.
JPMorgan Chase & Co warned on Thursday morning that the banking group could be forced to move thousands of staff out of Britain if the country loses its automatic right to sell financial services to the EU after last month's Brexit vote.
The sharp drop in the value of the pound also meant that France has overtaken Britain as the fifth biggest economy in the world. With the pound falling below €1.17 overnight for the first time since 2013, the size of the British economy in 2015 is now equivalent to €2.172trn - less than France's official GDP of €2.182trn last year.
The two British property companies on the JSE both traded higher after suffering huge losses over the previous 30 days. Capital and Counties [JSE:CCO] was 1.65% higher at R51.05 after losing 37.4% over the previous 30 days. Intu [JSE:ITU], which lost 27.54% over the same period, traded 1.84% stronger at R50.93.
The busiest share in the financial sector was FirstRand [JSE:FSR], which gained 2.87% to R43.44. There was also huge demand for Sanlam [JSE:SLM], which traded 1.57% higher at R57.60, and Old Mutual [JSE:OML], which gained 2.37% to R37.12.
Industrial shares delivered a mixed picture, with Naspers [JSE:NPN] gaining 0.33% to R2 119.98, but SABMiller [JSE:SAB] and British American Tobacco [JSE:BTI] marginally lower. SABMiller lost only 0.19% to R833.48 and British American Tobacco 0.11% to R935.55.
Steinhoff [JSE:SHF], which traded more than 4% softer on Wednesday, recovered strongly and at mid-morning was 2.39% higher at R81.94.
Anglo American [JSE:AGL] was the busiest in the resources sector and traded 6.61% higher at R147.65. Before Thursday’s trade the stock was already 6.18% higher over the previous seven days and 55.46% over the past 90 days.
