The major indices on the JSE were higher by Wednesday midday, after the
Resources index recovered strongly from Tuesday's slump of 4.1%.
By midday the Resources index was only 0.03% lower, which means that a stronger performance by industrial shares and the Financial index enabled the All-share index to lift 0.48% to 52 055 points. At that stage the Top 40 index was also 0.64% higher at 46 437 points.
The resources sector's improved performance had nothing to do with fundamentals in the commodity market but was purely because traders picked up bargains after Tuesday’s sharp drop.
The ongoing Greek crisis also did not play a big role in resources market volatility, although a strong dollar is negative for commodities. There is growing concern that the expected turnaround in commodity prices is not going to happen soon. This stems from disappointing economic data from China and current volatility on the Chinese markets.
This is particularly evident in the iron ore sector, where shares of iron producers such as Kumba [JSE:KIO] and Assore [JSE:ASR] recovered nicely on an expected recovery in iron ore prices. Now that it is clear the recovery is not happening, these stocks are again under severe pressure with both shares losing more 4% on Wednesday morning.
And indications are that the volatility in the resources sector will continue, as it became the playing ground of short-term traders instead of long term investors.
The technical analysts at Imara SP Reid said on Wednesday morning in their daily Market Snapshot that the resources sector remains in an area which should be used only for trading opportunities, and avoided from an investment perspective until medium-term indicators improve.
The rest of the JSE was quite upbeat in reaction to higher world markets. The big markets in Europe were more than 2% stronger while it seems of the volatility in Asia has subsided, with the Shanghai index only marginally lower and the Hong Kong market more than 1% stronger.
nvestors are still hopeful that last-minute efforts to prevent an exit by Greece from the eurozone will be successful. The European Union will decide today whether to hand Greece a last-minute bailout package.
At midday SABMiller [JSE:SAB] was 1.39% higher at R640.00 while Richemont [JSE:CFR] again traded above R100 at R100.30 after gaining 1.08% in morning trade. Naspers [JSE:NPN], which is closely linked to what happens on the Chinese market, was 0.29% higher at R1 900.43.
Most of the attention on Wednesday morning was on Vodacom [JSE:VOD] with a strong demand for shares after it was announced that the government sold a 13.9% stake in the group to the Public Investment Corporation to help fund a R2bn bailout for power utility Eskom.
By midday the Resources index was only 0.03% lower, which means that a stronger performance by industrial shares and the Financial index enabled the All-share index to lift 0.48% to 52 055 points. At that stage the Top 40 index was also 0.64% higher at 46 437 points.
The resources sector's improved performance had nothing to do with fundamentals in the commodity market but was purely because traders picked up bargains after Tuesday’s sharp drop.
The ongoing Greek crisis also did not play a big role in resources market volatility, although a strong dollar is negative for commodities. There is growing concern that the expected turnaround in commodity prices is not going to happen soon. This stems from disappointing economic data from China and current volatility on the Chinese markets.
This is particularly evident in the iron ore sector, where shares of iron producers such as Kumba [JSE:KIO] and Assore [JSE:ASR] recovered nicely on an expected recovery in iron ore prices. Now that it is clear the recovery is not happening, these stocks are again under severe pressure with both shares losing more 4% on Wednesday morning.
And indications are that the volatility in the resources sector will continue, as it became the playing ground of short-term traders instead of long term investors.
The technical analysts at Imara SP Reid said on Wednesday morning in their daily Market Snapshot that the resources sector remains in an area which should be used only for trading opportunities, and avoided from an investment perspective until medium-term indicators improve.
The rest of the JSE was quite upbeat in reaction to higher world markets. The big markets in Europe were more than 2% stronger while it seems of the volatility in Asia has subsided, with the Shanghai index only marginally lower and the Hong Kong market more than 1% stronger.
nvestors are still hopeful that last-minute efforts to prevent an exit by Greece from the eurozone will be successful. The European Union will decide today whether to hand Greece a last-minute bailout package.
At midday SABMiller [JSE:SAB] was 1.39% higher at R640.00 while Richemont [JSE:CFR] again traded above R100 at R100.30 after gaining 1.08% in morning trade. Naspers [JSE:NPN], which is closely linked to what happens on the Chinese market, was 0.29% higher at R1 900.43.
Most of the attention on Wednesday morning was on Vodacom [JSE:VOD] with a strong demand for shares after it was announced that the government sold a 13.9% stake in the group to the Public Investment Corporation to help fund a R2bn bailout for power utility Eskom.
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