[miningmx.com] – A DOWNGRADE of Japan’s credit rating, weak manufacturing data from China, and the continued weakness in the oil price hit resource stocks hard on the JSE on December 1 in a development analysts said was overdone, but probably likely to continue.
In an article by BDLive, analysts said that equity markets normally staged a rally before the year-end, but the fallout in commodity stocks was likely to negatively influence markets instead even if China economic weakness was over-stated.
BDLive cited Gerhard Lampen, head of online trading at Sanlam Private Wealth as saying: “We usually have a rally towards year end, but I do not think the market has legs for it this year”.
“Bubbles either burst or gradually deflate. I guess we’re experiencing the latter, but it’s a hard pill to swallow for many market players,” BP Bernstein portfolio manager Makwe Masilela said, referring to the continuing rout in resources shares.
IG SA market analyst Shaun Murison told BDLive that share price weakness of commodity stocks on December 1 were exaggerated by derivatives trading.
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