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JSE indices down for seventh consecutive day

Johannesburg - Nothing came of expectations that the JSE would bounce back on Wednesday morning after Tuesday’s sharp losses. By midday on Wednesday most of the major indices were down again for the seventh consecutive day.

Even technical analysts, who have said up to now that the technical charts are still positive for further upward momentum despite recent losses, are beginning to warn that circumspection is now appropriate, particularly in the managing of short-term trading positions.

By Wednesday midday the All-share index was another 0.47% lower at 52 713 points while the Top 40-index lost 0.45% to trade at 46 707 points. That follows Tuesday’s losses when the All-share index was 1.89% lower and the Top 40-index lost almost 2% on the back of disappointing growth figures and further job losses in the South African economy.

There was also no support from overseas markets, after Wall Street experienced the biggest loss in May on Tuesday due to some profit-taking, a dollar that is once again rampant and some mixed US economic data.

Imara SP Reid said in its daily market snapshot that Tuesday’s losses were somewhat overdone, and that it expected a marginal technical improvement at the outset of the session, but the All-share index opened lower and fell further.

The index is now almost 5% lower than the all-time high of 55 188 points reached on April 26; almost 4% of those losses occurred during the past week.

The Top 40-index is almost 3% weaker than the high of 48 965 reached on the same day. Imara SP Reid warned on Wednesday morning that the level around 45 800 to 46 200 points represents a realistic first target to the downside for the Top-40. Those levels were last seen early in February.

More and more portfolio managers are beginning to warn that current valuations are too high and unsustainable.

Tuesday's news that the economy grew by 1.3% only in the first quarter this year confirmed that share prices cannot be sustained by economic activity.

The resources sector was the biggest loser on Tuesday, shedding more than 3%, but it was the only index marginally in the black by Wednesday midday. At that stage it was only 0.11% higher at 41 784 points.

Imara SP Reid said that the stronger dollar outweighed the encouragement offered by the weaker rand and promises of increased infrastructure spending in China. A realistic appraisal of the resources sector chart indicates that further weakness down towards a minor support area at 40 960 points is on the cards.

Among the heavyweights in the sector BHP Billiton [JSE:BIL] was only 0.06% higher at R255.12, but Anglo American [JSE:AGL] gained 0.71% to trade at R192.40. Kumba [JSE:KIO] lost 1.7% to R148.80.

The gold sector has now lost almost a third of its value after it reached a high for the year of 1 591 points on February 5 this year. On Wednesday morning the index lost another 2.36% to 1 059 points.

The gold sector is the victim of a strong dollar which continually pushes the price down. The yellow metal traded at only $1 8871 per fine ounce on Wednesday morning.

AngloGold Ashanti [JSE:ANG] lost another 3.67% to R111.70 and Gold Fields [JSE:GFI] was 2.03% softer at R39.41. Gold Fields is now more than 40% lower than the 52-week high of R67.45 reached in early February this year.

Weak economic growth is a bad business environment for banks and the Financial index traded 1.2% lower at 16 839, more than 5% lower than the high of 17 911 reached on April 29 this year. The Banking index broke through the support level of 80 000 and Imara SP Reid said that bargain-hunting should be avoided, although these shares are oversold on the short.

FirstRand [JSE:FSR] lost 1.68% to R52.10 and Standard Bank [JSE:SBK] was 1.25% softer at R164.45. Both shares were among the top stocks traded in terms of value.

In the industrial sector, which lost 0.40% on Wednesday morning, British American Tobacco [JSE:BTI] gained 1.28% to R673.03 but SABMiller [JSE:SAB] lost 0.13% to R658.87. Naspers [JSE:NPN] was 1.01% higher at R1 819.55 but the share is now 9.62% lower over the past 30 days.

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Rand - Dollar
18.87
+0.3%
Rand - Pound
23.85
+0.2%
Rand - Euro
20.38
+0.2%
Rand - Aus dollar
12.31
+0.2%
Rand - Yen
0.12
+0.2%
Platinum
908.05
0.0%
Palladium
1,014.94
0.0%
Gold
2,232.75
-0.0%
Silver
24.95
-0.1%
Brent Crude
87.00
+1.8%
Top 40
68,346
0.0%
All Share
74,536
0.0%
Resource 10
57,251
0.0%
Industrial 25
103,936
0.0%
Financial 15
16,502
0.0%
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