SARAH BULLEN, Johannesburg | Wednesday 5.00pm.
SOUTH African markets bucked an negative day on international markets to end firmer across the board as a long-awaited cut in the repo rate fuelled expectations that an interest rate cut is imminent.
Dealers said that although the 25 basis point fall in the repo rate was only a token fall and will have very little real impact on interest rates yet, the Reserve Bank’s loosening of liquidity conditions signalled to investors that the Bank is confident that South African markets have passed the worst of the financial turmoil. Chances are good, dealers said, that the reduction is the start of a trend towards lower interest rates.
As expected with the repo rate cut, financial stock fared well on the day, with the index rising some 3,10%, pulling the all share index up 1,5% despite a poor day for gold. Again gold shares took a tumble as the bullion price failed to break back to $296 an ounce level and lost another $1 an ounce easier to $295,75. The all gold index lost just under 2,5% on general lack of reaction, dealers said.
Trading volume was high at around 1,5-billion, boosted by some heavy trading in Anglo American Corporation, De Beers and Minorco on the back of restructuring plans. Nedcor and South African Breweries also saw good volumes traded, dealers said. Local gains are particularly cheering as both Asian and European market took a knock on Wednesday, with most indices ending neutral to negative.
Bond also had a good trot, with the R150 posting steady gains to a 16,55% yield while the rand had a strong day against the dollar, holding out at around R5,74 to the dollar at 4.00pm local time.