JSE jitters: Do we see a bad Moody’s rising?
Rating agency gives its verdict on the SA economy on Friday, and what’s going to happen with interest rates?
The JSE pushed higher on Wednesday in broad-based gains despite uncertainty over the state of global growth. There are many domestic and international reasons for investors to be cautious, but a weaker rand on Wednesday proved supportive for local miners.
The main local event remains the Moody’s Investors Service credit rating announcement on Friday. According to Bloomberg, economists are roughly split over whether Moody’s will change SA’s outlook from stable to negative.
Moody’s is not expected to downgrade SA to junk status, but analysts warn that this may occur later in 2019, should the government fail to deliver on its promises of structural reform.
Adding to anxiety is the Reserve Bank, which will announce its latest stance on monetary policy on Thursday.
As the JSE closed the rand had weakened 1.25% to R14.60/$, 1.06% to R16.4429/€ and 1.22% to R19.2764/£.
The all share index rose 0.92% to 56,149.3 points and the top 40 1.06%. Banks gained 1.32% and the resources index 1.1%. Gold miners lost 0.44%. Local banks also pushed higher, with FirstRand gaining 2% to R62.07. Capitec added 0.64% to R1,290.20, ahead of its results for the year to end-February on Thursday. It expects headline earnings per share to rise between 17% and 20% compared to the prior corresponding period.
European bank equities were performing well. Earlier, European Central Bank (ECB) president Mario Draghi said the bank was ready to intervene if economic conditions worsened, noting that risks were tilted to the downside.
Reuters reported that the ECB was studying options to lower the charge that banks pay on some of their excess cash, as a possible way to offset the side-effects of its monetary policy stimulus.
Uncertainty over Brexit continues, while US-China trade negotiations resume on Thursday. Diversified miner Anglo American was up 1.29% to R383 and BHP 1.58% to R345.25.
Sasol added 1.11% to R449.47.
Rand hedge AB InBev gained 1.8% to R1,207.11 and Richemont 1.06% to R104.37.
Woolworths rose 1.05% to R44.29 and Truworths 1.43% to R67.35.
Trading ex-dividend, MTN slumped 4.97% to R86. On Tuesday, reports suggested Nigerian authorities had MTN in their sights over alleged tax evasion.
Naspers rose 2.44% to R3,298.49.
Shortly after the JSE closed the Dow was 0.19% lower at 25,603, while in Europe, the FTSE 100 and DAX 30 were flat. The CAC 40 was up 0.15%.
Gold was down 0.38% to $1,309.99/oz and platinum 0.48% to $855.95. Brent crude was little changed at $68.04 a barrel.