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Johannesburg - The JSE continued last week's pattern on Monday, with the market making promising gains in early trade to lose steam later in the day.
By mid-morning on Monday the All-share index was 0.04% softer at 51 147 points after gaining 0.60% in early trade, while the Top 40 index was 0.03% stronger at 44 470 points after trading 0.80% higher at 44 845 points.
At that stage the Industrial index was only 0.12% up after gaining more than 0.70% in early trade, while the Financial index was 0.09% stronger but traded 1.2% stronger in early trade.
Profit-taking pushed the Gold index 2.15% down after the index gained more than 14% over the previous seven days, while the resources index was 0.29% softer on the back of weaker commodity prices.
The JSE’s initial run was in line with world markets with Wall Street on a record high, while the FTSE index in London also hovered around record levels.
The strong run on world markets was supported last week by solid economic data out of the US, China and even Europe; the trend was confirmed on Friday with the latest US payroll data indicating strong underlying wage growth.
But Asian stocks also gave up some of their early gains on Monday as investor caution grew before a news conference by president-elect Donald Trump on Wednesday, where his views on global trade and China will be carefully scrutinised for future policy implications.
Analysts are also aware that the strong run on US markets, fuelled by optimism over Trump's plans to stimulate the economy with lower taxes and increased infrastructure spending, could easily change into a massive wave of profit-taking with even a small disappointment from Trump’s policy proposals on Wednesday.
The strong pay data also increased the possibility of US interest rate hikes which could lead to an outflow from emerging markets to
the US, although combined investment flows into Asia were positive at nearly
$600m for the week ending January 4.
The Industrial index, which was the best performer on the JSE last week and gained 2.21%, was again supported by the share prices of big companies with strong trade ties with China.
Naspers [JSE:NPN], which owns 34% of Tencent, the biggest company in China, traded 1.23% higher at R2 47.55. The stock gained 6.87% over the first seven days of the new year, and is now trading at levels last seen in November last year.
Richemont [JSE:CFR] was 1.77% higher at R91.77 and British American Tobacco [JE:BTI] 0.79% firmer at R777.00.
Anheuser-Busch Inbev [JSE:ANH], which lost more than 20% of
its value over the past 90 days, was 1.14% higher at R1 463.00.
The Financial index gained 1.17% last week but moved very little on Monday, with FirstRand [JSE:FSR] trading only 0.08% higher at R53.27. FirstRand was the busiest share on the JSE in morning trade, with 1.1 million shares sold for more than R63m. Barclays Africa [JSE:BGA] was only 0.19% firmer at R159.00, but Standard Bank [JSE:SBK] gained 0.90% to R151.73.
Resources shares, which also gained gained 1.17% in the first week of the year, were hit by lower commodity prices. Australia has forecast a steep decline in the price of iron ore, its most valuable export commodity, calling an end to an unexpected rally fuelled by strong demand from China. Kumba [JSE:KIO] was however still 0.23% higher at R162.44.
BHP Billiton [JSE:BIL], an important producer of iron ore, lost 0.19% to R223.86, but Kumba’s holding company Anglo American [JSE:AGL] was 0.49% stronger at R194.02.
