SARAH BULLEN in Johannesburg | Wednesday 5.45pm
LOCAL stocks surged into Wednesday morning with far stronger undertones pushing the market up in early trade. Most of the gains were eroded in the afternoon session, however, as persistent fears over the Russian economy dragged the market off its highs.
Dealers said most of the morning’s bullish sentiment came from Wall Street’s overnight gains plus positive news coming out of the Asian markets with Hong Kong’s Hang Seng index up 5,7% and Japan’s Nikkei Dow up 2,25%.
Despite its racing start, the Johannesburg Stock Exchange was unable to hold onto the positive sentiment as fears over Russia 33% devaluation of the rouble chipped away the morning’s gains. Dealers said the market is also concerned about Hong Kong’s rise, which came largely as a result of monetary authorities throwing money into the market.
Giving in to the afternoon’s slump, all the indices closed well off their day’s highs with the all share index gaining 1,77%, 111 points, to close at 6384. The financial index closed 1,19% up, 129 points, on 10993 while the industrial index closed the day 1,21% higher, 89 points, on 7415. Gold shares, virtually unchanged as the gold price inched up to $285,60 an ounce, gained 11 points to 907. Bonds came under pressure on the day with the R150 losing 14 basis points from its Tuesday’s close of a 16,90% yield, to hover around 17,00% in afternoon trade. At close of market the bond yield had crawled back to a 16,89% yield.
The rand sustained some heavy losses during the afternoon session, dropping ten cents from R6,24 to R6,34 to the dollar as concerns over the Russian economy spread into the currency market. At 4.30pm the rand was at R6,36 to the dollar. A pound cost R10,26 at 4.30pm.