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Johannesburg - For a short while on Tuesday morning it looked as if the world’s financial markets would shake off Monday’s blues, caused by a crash on the Chinese markets, but the recovery did not last long.
By midday on Tuesday most markets, including the JSE, were lower again although the losses were far more modest than the previous day.
The JSE experienced a swing of more than 1% in morning trade with the All-share index reaching a high of 49 705 points shortly after trading started and a mid-morning low of 49 087 points - a drop of more than 700 points.
By midday the index was 0.42% lower than the previous day at 49 111 points and the Top 40 index 0.53% down. The Financial index lost 0.98% on Tuesday after Monday’s sharp drop and the Industrial index was 0.50% lower.
Gold shares continued their run on the back of political tension in the Middle East between Iran and Saudia Arabia, which forced investors to look at gold as a safe haven against political uncertainty.
At midday the Gold index was 5.17% higher, while the Resources index was only 0.09% down.
More stability returned to Asian markets on Tuesday, although they were still lower. The European markets initially tried to shrug off the uncertainty about China, but were again slightly lower by midday.
On Tuesday, analysts warned against more volatility on the back of a weak global growth outlook.
"Investors need to be more cautious," Matthew Sherwood, Sydney-based head of investment strategy at Perpetual, told Bloomberg News.
"Growth remains a concern. How the year plays out is unclear, but the only surety is that volatility will increase. Given the tough end to the year, it is to be expected that traders will not try and get too involved just yet and are possibly hoping for some sort of decent liquidity to drift back into the market,” Standard Bank trader Warrick Butler said.
The rand was flat against the dollar on Tuesday and traders and analysts expect sideways trade as the market slowly gets back to full steam after the year-end break.
Old Mutual [JSE:OML] and Sanlam [JSE:SLM], South Africa’s two biggest insurers which both lost more than 6% on Monday, were again lower on Tuesday. Sanlam was 2.18% softer at R56.00 and Old Mutual lost 2.04% at R37.89. Old Mutual is now almost 11% lower over the past 30 days.
Among the banks FirstRand [JSE:FSR] stopped the losses of the recent past, although it was only 0.05% higher at R40.32. The bank lost 9.05% over the past seven days and 19.6% over the past 30 days. Standard Bank [JSE:SBK], which is 7.14% softer over seven days and 20.49% over 30 days, lost another 1.6% on Tuesday morning to trade at R109.44. Barclays Africa Group [JSE:BGA], which suffered similar losses over the past month, was 0.74% lower at R134.99.
MTN [JSE:MTN] was the busiest share of the morning in terms of volume. The share price also stopped recent losses and gained 0.54% to R130.66. MTN had a terrible year in 2015, mainly due to the record-setting fine imposed on its Nigerian subsidiary by the Nigerian Communications Commission.
The mobile telecoms group fell by 35.6% in the past year. MTN missed the deadline to pay the penalty and is now waiting for a decision on the legality of the fine by the Nigerian high court.
Naspers [JSE:NPN] and Richemont [JSE:CFR], which both have huge exposure to the troubled Chinese economy, continued Monday’s losses. Naspers was 1.44% lower at R2 030.27 and Richemont traded 0.82% softer at R107.03.
The two biggest commodity shares, BHP Billiton [JSE:BIL] and Anglo American [JSE:AGL], continued their decline. BHP Billiton was 0.54% weaker at R169.80 and Anglo American lost 1.31% to R64.04 after dropping more than 7% on Monday.
The best performing gold shares were Gold Fields [JSE:GFI], which gained 7.77% to R46.82, Sibanye [JSE:SGL], which rose 6.19% to R26.09, and Harmony [JSE:HAR], which was 4.46% higher at R18.05.
Anglo American Platinum [JSE:AMS] was 6% stronger at R183.80, while the troubled Assore [JSE:ASR] gained 7.74% to R66.80.
