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Johannesburg - Stability returned to the financial markets on Tuesday, including the JSE, after the previous day’s rout fuelled by concerns about Greece’s future in the eurozone.
Although the uncertainty will not be over before Sunday’s referendum in Greece on creditors' proposals to bail out the debt-ridden government, technical analysts said the initial reaction has now worked its way through the market.
“Near-term trading direction will largely hinge upon the additional developments and negotiation outcomes in the days ahead,” said Imara SP Reid in its daily Market Snapshot on Tuesday morning.
The major indices on the JSE were still marginally lower than the previous day at midday, but that was mainly due to another sharp drop in the prices of resources and gold shares as the dollar surged further on euro weakness.
The biggest losers on the JSE on Monday - financial shares and Naspers [JSE:NPN] - were both higher by midday and the Industrial index had hardly moved.
By midday the All-share index was only 0.23% lower at 51 881 points while the Top 40 index was 0.29% softer at 46 260. The Financial index was at that stage already 0.47% higher while the Industrial index was only 0.01% lower, with Naspers more than 1% higher.
The Resources index was however already 2.52% lower and the volatile Gold index lost 3.18% as the dollar gained another 0.58% against the euro. There was unfortunately no support for resources from a weaker rand, which also stabilised after Monday’s losses and traded unchanged at R12.23 a dollar.
READ: Rand stabilises but Greece still poses risk
The European markets were also more stable on Tuesday morning, but the local market took its lead from the emerging markets in the east which rebounded strongly after Monday’s rout.
The volatility in the Chinese market continued on Tuesday morning with wild swings, but the share market in Shanghai surged strongly at the end of the trading day.
Shanghai plunged more than 5.1% in the morning before bouncing back as bargain-buyers moved in after a recent hefty sell-off. The composite index closed 5.53% higher - its best daily gain in six years - adding 224.19 points to 4 277.22.
The market in Shenzhen finished up 5.53% to 4 277.22, having sunk more than 6% earlier.
Emerging markets, such as China and South Africa, are particularly vulnerable to the fallout of the Greek crisis, as investors tend to avoid riskier assets in times like these.
Naspers gets a boost
Hong Kong also jumped 1.09%, which gave Naspers a boost. Tencent, the Chinese internet giant which is listed in Hong Kong and in which Naspers has a 34% stake, traded 1.05% higher after losing more than 4% on Monday.
Naspers was at midday 1.52% higher at R1 868.00 after dropping almost 5% on Monday. The company announced on Monday that it had invested another R10.3bn in the group’s activities in the year up to March this year.
READ: Naspers boosts digital terrestrial TV offering
SABMiller [JSE:SAB] was however 0.97% softer at R622.26 and Richemont [JSE:CFR] traded 1.26% weaker at R101.67.
Banking shares were however higher and FirstRand [JSE:FSR] gained 1.07% to R53.08 and Barclays Africa [JSE:BGA] was 1.05% higher at R179.21. Standard Bank [JSE:SBK] traded 0.66% higher at R158.99 by midday.
In the resources sector various shares reached new 52-week lows. Among them were Anglo American Platinum [JSE:AMS] which lost 2.69% to R271.00 and Impala Platinum [JSE:IMP] which was 2.20% softer at R54.30. ArcelorMittal [JSE:ACL] traded 1.40% down at a new low of R12.72. In April 2011 the share traded as high as R92.40.
Kumba [JSE:KIO] was again one of the big losers, dropping 4.5% to R148.15. The share is now 32.35% weaker over the past 90 days.
Harmony [JSE:HAR] was the biggest loser in the gold sector, dropping 6.51% to R15.94. The share price is now close to the 52-week low of R15.69.
