SARAH BULLEN, Johannesburg | Wednesday 6.00pm.
THE Johannesburg Stock Exchange, pining of late for some positive domestic data, largely ignored an early Christmas present by the Reserve Bank in the form of a significant drop in the repo rate on Wednesday.
The market closed almost flat, with the all share index a negligible four points on mixed results by the financial and industrial indices which dropped 0,44% and gained 0,5% respectively. Markets started climbing in the morning, shortly after the Reserve Bank loosened liquidity, allowing the repo rate to fall 21 basis points to 19,488% from 19,697%. Following the repo cut, three of the four major commercial banks announced a 50 basis point cut in their prime rates to 23%.
Dealers said the long-awaited cuts provided the market with little more than a spurt, before it found more negative data to latch on to. That came in the form of a disappointing day on European markets, which traded down on the expectation of a poor start to trade on Wall Street. Anticipation of a negative Wall Street session put a cap on the JSE’s climb, revealing an inability of the market to follow through on positive domestic news.
“The market seems to be looking for negative news,” said Barnard Jacobs Mellet head of dealing Echardt van der Hoven.
Asian markets had a fairly strong day, with Japan’s Nikkei 225 average climbing 1,02% and Hong Kong’s leading Hang Seng Index closing 0,8% up, off its best levels. Bonds vacillated throughout the day, dipping below the 16% yield before closing at a 16,07% yield. The rand held fairly steady during the day, closing at R5,64 to the dollar and R9,30 to the pound.