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Johannesburg - The JSE, which made a strong turnaround on Tuesday afternoon, continued this recovery on Wednesday morning and by midday most significant indices were higher. The market was however fairly volatile and by midday some of the early momentum seemed to be lost.
The recovery on Tuesday afternoon was sparked by an even more dramatic turnaround in the oil price in New York, which also pushed Wall Street higher.
The oil price has been highly volatile over the past few days, with swings of $3 to $4 a day. The massive oversupply in the market still causes jitters, but the price jumped on news of talks of possible coordination between major producers to slash output.
By midday on Wednesday the All-share index on the JSE was 0.69% higher at 47 862 points and the Top 40 index traded 0.62% stronger at 42 892 points. The All-share index was at one stage just above 48 000 points and the Top 40 index above 43 000 points, but by midday the intraday graph of both indices were pointing down again.
What happens on Wall Street will determine how the JSE ends the day.
The local market is also waiting for the announcement on local interest rates by the South African Reserve Bank’s monetary policy committee. The rand was slightly firmer on Wednesday morning at R16.39 to the dollar, as the market is discounting a hike of 50 basis points. Such an increase would hurt economic growth in the short term, but economists say it may be necessary to stabilise the rand and release inflation pressure.
The firmer rand supported the Financial index, which was 0.70% higher by midday with Standard Bank [JSE:SBK] 0.91% up at R103.40 and Barclays Africa Group [JSE:BGA] gaining 0.67% to R129.87. FirstRand [JSE:FSR] was however 1.47% softer at R40.75. Among the insurers, Sanlam [JSE:SLM] rose 1.21% to R53.68 and Old Mutual [JSE:OML] gained 0.33% to R36.81.
The loss in momentum on the JSE was mainly due to the resources sector, which was virtually unchanged by midday after being more than 1% higher in earlier trading.
The big dual-listed commodity conglomerates all gave up early gains. Anglo American [JSE:AGL], which at one stage was more than 4% higher at R60.50, at midday traded 2.09% down at R56.59. BHP Billiton [JSE:BIL] was 1.39% softer at R150.10 after reaching an intraday high of R155.65. Glencore [JSE:GLN] reached R12.10 but by midday was only 0.10% stronger at R20.07.
The commodity sector is still hampered by concerns about the slowdown in China, and the Chinese stock market fell sharply over the past two days on news of poor company results in the world’s second-biggest economy. Disappointing Apple sales in China contributed to concern.
Some of the oversold commodity companies which made strong recoveries over the past few days fell victim to profit-taking. Assore [JSE:ASR], which gained 29.7% over the previous seven days, by midday was 2.73% higher at R82.68. Kumba Iron Ore [JSE:KIO] lost 3.98% to R31.35 after gaining 28.5% over the previous seven days. African Rainbow Minerals [JSE:ARI], which gained a massive 43.63% over the past week, was only 0.33% softer at R51.68.
Gold shares also took a breather on Wednesday morning on the back of a stronger rand. At midday the Gold index was 0.94% lower. Two of the high flyers of the gold rush, DRDGold [JSE:DRD] and Sibanye Gold [JSE:SIB], however reached new 52-week highs by midday. DRDGold, which gained 87.66% over the past 30 days, was 0.63% higher on a new high of R4.83. Sibanye, which is more than 50% higher than a month ago, gained 0.83% to R37.66.
The Industrial index was 0.81% up as the five biggest companies on the JSE, which represent more than half of the market’s value, were all higher. The world’s two biggest beer companies, SABMiller [JSE:SAB] and Anheuser-Busch InBev [JSE:ANB] both reached new intraday highs.
SABMiller traded 0.10% up on a new high of R884.94. AB InBev at R2 004.00 was only 0.20% stronger at midday, but the share earlier traded at an intraday high of R2 025.00. The beer giant gained almost 3% since its listing on the JSE earlier this month.
Naspers [JSE:NPN] was 0.62% higher at R1 859.00 and British American Tobacco [JSE:BTI] gained 0.55% to R861.00. Richemont [JSE:CFR] traded 0.4% stronger at R103.21.
