MICHAEL METELITS, Johannesburg | Wednesday 5.00pm.
SOUTH African markets moved all over the map on Wednesday, responding to a number of forces before settling for mediocre losses in shares — and mediocre gains in bonds and currency markets.
“We had a bit of a bumpy ride” says Kevin Brady, a dealer at Barnard Jacobs Mellet, saying the day had a weak opening but picked up in a midday rally on the back of a seven-basis-point cut in the repo rate. With additional cuts in the repo rate, a long-term rate cut is becoming increasingly likely in the near future.
Dealers watched the repo rate, domestic sales figures and interest rate deliberations in Britain and the United States. Neither the Bank of England nor the US Federal Reserve is expected to cut rates this time around.
Data showing weak car sales in South Africa in January and negative international influences took the brunt of the blame for pushing the JSE into the red at the finish.
The all share index slipped 27 points or 0,47%, while the JSE’s industrial index gave up 0,59% or 40 points.
The financials index barely moved, losing 0,08% or 7 points on the day while the all gold index took the heaviest hit, down 16 points or 1,70%.
Bonds were basically flat. The benchmark R150 bond moved from it’s Tuesday close of 15,41% to a Wednesday mark of 15,42%.
The rand consolidated its gains against the dollar and even finished under R6, at R5,98. “It’s encouraging to see the rand holding steady at these levels”, Brady said.
Rising Japanese interest rates, weakness on Wall Street and a rising yen worried Asian investors on Wednesday, starting a sell-off that undercut trading across the region.
Japan’s Nikkei slumped 1,31%, losing 188 points on the day, while Hong Kong’s Hang Seng sustained muted losses at 0,25% or 24 points.
Interest rate concerns dominated European trading on Wednesday. In London the FTSE 100 inched 3 points higher to 6015 while France’s CAC-40 rose 23 points to 4266. Frankfurt’s Xetra Dax dipped 14 points to 5150.
The Dow Jones Industrial average lost 71 points on Tuesday in a sell-off of most markets in the US. A market sense that the Fed will not cut interest rates may mean further losses in Wednesday’s trading.