Local stock indices rebound to notch up record highs

THE JSE’s main stock indices booked record closing highs yesterday as they rebounded from two consecutive losing sessions and were pulled up by a worldwide rally triggered by aluminium giant Alcoa’s encouraging outlook for the year.

The all share index finished the day 0.44 percent higher at 40 330.44, its highest close and within striking distance of an intraday peak of 40 341.40 reached on Monday.

The benchmark Top40 index added 0.49 percent to 35 808.50, also a record close.

The JSE rally was led by blue chips including luxury goods maker Richemont, which added 3.75 percent to R71.62 after Credit Suisse upgraded the sector to overweight from neutral, partly on expectations for an improvement in the global economy.

South African equities have carried last year’s bull run into 2013 but the short-term outlook was mixed, with some technical indicators pointing towards a correction.

On both the all share and the Top40, the 14-day relative strength index – a measure of momentum watched by technical analysts – was well past the overbought level of 70 and has been for several days.

But some analysts said momentum indicators lost their significance when markets embarked on clear paths.

George Glynos, the managing director at financial consultancy ETM, said that in the short term, the market’s record run did not look spent.

“On the daily chart, things still look quite bullish,” Glynos said.

“On the Top40, if you break above the prior high at 35 826.59, you would target 36 600.”

Other big gainers included the world’s two top platinum producers, rising in the wake of recent gains in the metal’s spot price. Anglo American Platinumclimbed 2.58 percent to R477. Impala Platinum jumped 3.16 percent to R171.24.

Trade picked up with 148 million shares changing hands, compared with the 137 million shares traded on Tuesday. Advancers outnumbered decliners 178 to 119.