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Johannesburg - Local investors on the JSE will see very little growth this year, as this week’s promising run on the back of strong global markets was brought to halt on Friday morning by some profit taking.
The mood did however change later in the morning and it seemed if the market’s upward momentum was restored, but the gains were still very modest.
By mid-morning the All-share index was again just above 50 000 points, a level last seen at the end of February this year. At that stage the index was 0.13% higher at 50 611 points, while the Top 40 index traded 0.14% softer at 43 955 points.
Many of the shares which reached 52-week highs in Thursday’s strong run, when the All-share index gained 2.27%, fell victim to profit-taking and initially traded lower.
At Friday morning’s level the All-share index is just a little more than 2% higher than the 49 316 points at which it started the year. The index reached a level of 54 484 points in the first half of 2016, but is now 8% lower than the 52-week high.
The JSE also followed the lead of global markets with Asian markets slightly lower on Friday, after strong gains this week on expectations that president elect Donald Trump will follow expansion policies to boost the American economy.
By mid-morning most of the major indices were modestly higher after initial sharp losses.
The biggest movers were financial shares, with the Financial index 0.64% higher in response to a rally in European banking shares after the European Central Bank announced it will begin tapering its asset purchases, which pushed bond yields higher. Higher yields are seen helping reduce pressure on bank margins, which have been pressured by sluggish economic growth and ultra low interest rates.
The ECB said it would cut its asset purchases from €80bn to €60bn per month from next April, but promised protracted stimulus to aid a still-fragile recovery.
Among the local banks FirstRand [JSE:FSR] again traded at a new 52-week high of R53.25, 0.38% up on the previous day’s close. The share price was initially more than 1.5% softer due to profit-taking before regaining its momentum. FirstRand is now more than 15% higher over the past 30 days.
Standard Bank [JSE:SBK], which gained 10% over the past month, was only 0.03% stronger at R153.22. Barclays Africa [JSE:BGA], which closed on a new 52-week high on Thursday, lost ground and traded 0.47% softer at R166.26.
Naspers [JSE:NPN], the biggest share on the JSE in terms of market value of tradable shares, dropped more than 2.5% in initial trade before it recovered. By mid-morning it was only 0.04% lower at R1 983.20. The initial losses were caused by news that Tencent, the Chinese internet giant in which Naspers has a 34% stake, traded 1.68% lower on the Hong Kong stock Exchange. Naspers is still more than 14.5% lower over the past month.
The turnaround by Naspers also helped turn the industrial index around as it traded more than 1% lower shortly after the opening. By mid-morning it was again 0.13% stronger.
Steinhoff [JSE:SHF], the international retail giant which gained more than 13% over the past seven days due to strong results in the third quarter, was 0.73% higher at mid-morning at R74.62. However, in early trade the stock shed more than 5% to only R69.75 as some investors cashed in their profits of the past few days.
Some well-known names again traded at new 52-week highs, despite some losses in early trading. Barloworld [JSE:BAW] was 1.11% up at a new high of R112.7, while Telkom [JSE:TKG] traded 0.22% firmer on a new high of R73.16. Bidvest [JSE:BVT] also set a new high of R172 after it gained 0.88% by mid-morning.
The resources sector lost 0.62%. There was again much interest in Glencore [JSE:GLN], but the share traded 0.98% lower at R52.33 after closing on a new 52-week high on Thursday. The company joined forces with Qatar’s sovereign wealth fund to buy an $11bn stake in Rosneft, the Kremlin-run oil producer that pumps more crude than Exxon Mobil. Glencore will also get the right to sell 220 000 barrels a day of Rosneft oil for five years.
READ: Glencore deal making king Glasenberg is back with wager on Russian oil
Glencore is now 55.55% higher over the past month and has gained more than 155% in the year to date. Kumba [JSI:KIO], which set a new 52-week high of R172.60 on Thursday, lost 2.52% to R168.25. South32 [JSE:S32] was 0.62% lower at R30.27. Investors took profits after the share gained more than 50% over the past 90 days and closed at a new high of R30.46% on Thursday.
Sibanye [JSE:SGL] was one of the big losers of the day, trading 8.43% lower at R25.96 as the Gold index lost 3.24%. The index is now more than 53% softer over the past 90 days.
