Johannesburg - Share prices on the JSE continued to drift mostly sideways on Thursday morning as the latest minutes of the Federal Reserve’s open market committee did not shed much light on future movements in US interest rates.
Investors were also waiting for the outcome of the South African Reserve Bank’s monetary policy meeting which ends later in the day for indications of what will happen with local interest rates later this year.
Imara SP Reid said in its daily Market Snapshot that Wednesday’s Fed statement mostly confirmed the notion that policy adjustment would be “data dependent” in the weeks and months ahead.
“On balance the tone of the statement suggested that a potential interest rate hike was likely to be later rather than earlier. For the moment 'lower for longer' remains the dominant interpretation of the near-term interest-rate trajectory,” it said.
This could be positive for the domestic market, which depends on foreign investors chasing higher yields in emerging markets like South Africa.
By midday the All-Share index was only 0.04% lower at 54 171 points, trading in a narrow range of about 0.25%. The Top 40-index was again below 48 000 and 0.08% lower than on Wednesday at 47 957 points. Imara SP Reid said the index could soon test the support level of 48 700 points.
The Industrial (-0.27%) and Financial (-0.25%) indices were both moderately lower, but the Resources index bounced back from two days of losses to trade 1.42% higher. Analysts said the Resources index currently presents good trading opportunities and some volatility can be expected as role players engage in some profit-taking and bargain hunting. Gold was also 1.12% higher.
The market is currently also influenced by company results and other corporate activity.
The financial sector paid a great deal of attention to Investec’s full-year results and the banking group reported a 10.2% rise in full-year profit on Thursday, helped by a strong showing at its asset management and lending businesses. The share price rose 0.80% to R116.90.
READ: Investec full-year profit climbs
There was much interest in Mediclinic’s [JSE:MDC] results after its main competitor Netcare [JSE:NTC] reported strong results earlier this week and the share price rose sharply.
READ: Mediclinic gains on Swiss, SA hospital growth
Mediclinic said its basic normalised headline earnings per share increased by 9% to 408.2 cents and the final dividend by 11%, but the share price lost 5.46% to R114.01. More than 1.5 million shares were sold for more than R185.00. It seems the good news has been discounted already as the share price is still 16.24% higher over the past 90 days.
Aspen [JSE:APN] was also one of the busiest shares in morning trade. The market was pleased with the announcement that its Australian subsidiaries will sell 130 products to the Indian group Strides. This is part of a plan to simplify group and product structure. The share price, which was under pressure up until now, gained 1.86% to R382.99.
Tiger Brands [JSE:TBS], which lost more than 4% on Wednesday due to disappointing news from its African subsidiaries, slipped another 3.07% on Thursday morning to trade at R286.05.
MTN [JSE:MTN], which lost nearly 3% on Wednesday as 2 000 unionised employees went on strike for better pay, recovered by 0.73% to R230.49. Wednesday’s drop was the biggest daily percentage decline in about two months.
Among the big shares Naspers [JSE:NPN] traded 0.36% lower at R1 834.44. The share has been drifting sideways for the past couple of weeks and is now 1.55% lower over the past 30 days.
SABMiller [JSE:SAB], which said it wants to enter the Australian bond market, lost 0.38% to R669.15.
In the resources sector South32 is still improving and traded 0.98% higher at R21.70 on Thursday. At that stage BHP Billiton was also 0.86% stronger at R261.13.