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Johannesburg - The JSE recovered on Wednesday morning in line with world markets when the oil price rebounded somewhat, but analysts say global sentiment is still jittery as worries about the economy and the upcoming earnings season kept traders on edge.
After a confident rebound in March, analysts suggest dealers from Asia to the Americas may be concerned that gains which followed January and February's bloodbath were a little overdone.
By mid-morning on Wednesday the All-share index was only 0.32% higher at 51 370 points, while the Top 40 index traded 0.36% up at 45 276 points.
The rand continued its decline from the previous day and traded 0.7% lower at R15.20 to the dollar. The drop in value is mainly the result of a worldwide sell-off in the currencies of emerging markets, but current political uncertainty in South Africa continued to play a role.
READ: R15/$ rand struggling due to politics and risk aversion
The weaker rand hurt financial shares with the Financial index 0.94% down, but supported rand hedge shares including the big dual-listed industrial and commodity stocks. The Industrial index was only a workmanlike 0.44% higher, but the Resources index gained 1.48% and the Gold index 3.06%.
Data last week showed foreigners are estimated to have pumped $36.8bn into emerging market stocks and bonds in March, the highest monthly inflow in nearly two years, the Institute of International Finance said.
Alex Wolf, emerging markets economist at Standard Life Investments, however said it is still too early to call an economic stabilisation in China because property inventories are still very high and much of the recent economic activity was driven by quasi-fiscal spending.
Even in the United States, a rare bright spot for the global economy, recent weak data prompted economists to cut their first-quarter gross domestic product growth estimates by as much as half a percentage point to as low as a 0.4% annualised rate, which would be its slowest growth in two years.
The oil price was however the story of the morning as oil prices recovered almost 2% on renewed hopes of a deal between major producers to curb production. Brent was 1.7% higher at $38.51.
Prices soared in March after talks were arranged by oil giants Saudi Arabia and Russia in a bid to end a slump that had battered global markets. Those hopes were dealt a blow on Friday when Saudi Arabia said it would not take part without agreement from Iran and other major suppliers.
But the oil market rallied again on Wednesday after Kuwait said it still thought the April 17 meeting in Doha could produce a deal, even without the inclusion of key Opec member Iran.
"Oil producers have no option but to freeze their production as oil prices are low and hurting everyone," Kuwait's Opec governor Nawal al-Fezaia said. "All early signs before the meeting point to this conclusion."
Sasol’s [JSE:SOL] share price however did not respond to much to the higher oil price and weaker rand, and traded only 0.89% higher at R411.83. The share price lost more than 10% over the previous seven days due to the stronger rand, which means that the company receives less for its synthetic fuel which is priced in dollar.
Anglo American [JSE:AGL] was the star performer among the big commodity shares and gained 3.06% to R133.96. Glencore [JSE:GLN] traded 1.84% stronger at R30.45, while BHP Billiton [JSE:BIL] gained 1.78% to R158.12. BHP Billiton lost almost 10% of its value over the previous seven days due to profit-taking.
South32 [JSE:S32], the spinoff from BHP Billiton which among others produces manganese and aluminium, gained a massive 7.23% on Wednesday to trade at R16.46 after losing more than 13% over the previous seven days.
The spotlight in the financial sector was on Barclays Africa [JSE:BGA] as Barclays began to put the process in place to divest from its African subsidiary.
The British banking group is seeking pro-approval from its shareholders to implement market transactions to enable it to sell down its 62% shareholding in Barclays Africa so that it can de-consolidate the African subsidiary from a regulatory and accounting perspective.
Barclays Africa was again one of the busiest shares on the JSE in terms of value and almost a million shares were sold for more than R136m. The share price lost 3.49% to R136.31 and is now more than 15% lower over the past 30 days. There was also brisk trade in FirstRand [JSE:FSR], which traded 1.92% softer at R44.87.
