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Johannesburg - The new wave of optimism on global markets did not have a big influence on the JSE on Tuesday morning.
The major indices on the JSE were by midmorning barely in the black and the indices were trading in a very narrow band, indicating that local investors are looking for new indicators to warrant the bigger risk appetite that swept the markets.
By midday the All Share-index on the JSE was only 0.06% higher on 52 967 points and the Top 40-index gained only 0.12% to 46 675 points. The All Share-index traded in a narrow band of only 234 points or 0.4% in the morning trade. At that stage the industrial index was only 0.04% higher and the financial index 0.60%
On Wednesday the JSE joined the euphoria on global markets on the back of much better than anticipated trade data from China, but the market lost some momentum towards the end of the day.
The economic news was overshadowed on Thursday by news that Singapore, one of the top economies in the far East, is further easing monetary policy after economic data indicated that growth stalled in the first quarter.
The Asian markets rose to their highest levels in more than four months on Thursday and emerging currencies weakened as hopes grew that more central banks will join the city state in easing monetary policy in the coming months.
Some analysts however said the decision by Singapore is a timely reminder to the markets that the global economy is still facing major headwinds notwithstanding the optimistic trade data out of China on Wednesday. Earlier this week, the IMF cut its global growth forecast for the fourth time in the past year, citing a bunch of factors including chronic weakness in advanced economies.
This seems to be the line of thinking of local investors as the stock market moved mostly sideways after a promising start.
The dollar continued its recovery against the yen and the euro for a second day and that boosted the Japanese share market, as it is good news for Japanese exports. Analysts said however that dollar might not go much higher for now.
A strong dollar is also not good news for commodities, including gold, as buyers will have to pay more for it in their own currencies. That explained why the gold index on the JSE was 2.25% lower by midmorning and the resources index 0.44% softer.
The rand also softened somewhat against the stronger dollar but is still remarkably resilient. By midmorning the rand stil traded R14.64 to a dollar after it reached R14.53 on Wednesday, the highest level since 9 December last year.
The losses in the very volatile resources sector were very modest on Thursday and by midmorning Anglo American [JSE:AGL], which gained almost 10% on Wednesday, traded only 0.18% softer on R143.49. Glencore [JSE:GLN] only lost 0.33% to R32.34 and BHP Billiton [JSE:BIL] was 1.87% stronger on R184.50.
Anglogold [JSE:ANG] lost only 1.28% to R223.62 as the company said illegal miners have taken control of areas at its Obuasi mine in Ghana that hold the richest deposits of gold, slowing efforts to redevelop the facility.
The company said it may consider its options as an investor if the illegal takeover continues. “The company fears serious and lasting consequences if this situation is allowed to continue.”
In the industrial sector Sasol traded 0.82% softer on R445.02. Naspers [NPN] was 0.47% higher on R2 124.99 but Richemont traded 1.87% lower on R95.87.
MTN [JSE:MTN], which traded more than 4% higher on Wednesday, gained another 1.79% to R136.91 on expectations that negotiations with the Nigerian authorities on the big fine of $3.9bn that was slapped on MTN, might be successfully concluded soon.
The optimism was fuelled by the news that the group’s executive chairperson Phuthuma Nhleko, who returned to lead the African wireless company’s negotiations over the fine, is moving forward with plans to step down next month, a sign he is confident a resolution will be reached by then.
Vodacom [JSE:VOD] was 0.69% lower on R164.42 after the company traded earlier the week at a 52 week high of R165.56.
