THURSDAY, 6.00PM:
WITH the panic of a market crash abating, the Johannesburg Stock Exchange dragged itself through a very lacklustre Thursday. All key indices ended at the low-end of the trading range, with Andre Crawford-Brunt of Deutsche Morgen Grenfell describing the day as “soggy”.
There was praise all round, however, for Reserve Bank governor Chris Stals’ decision to cut the repo rate by a conservative 50 basis points, to 17,5% on Thursday morning.
In light of Stals’ positive announcement, ING Barings chief economist Kristina Quattek expressed surprise at the uncertainty in the market that drove the indices down during the afternoon session. Despite the astute handling of the falling rand by the Steals, and Wednesday’s meeting at which the governor Chris Steals reassured the commercial banks that the lending will be gradually lowered, there is still a great deal of concern that the rates are too high, she said.
She speculated that the market also appears to fear that, in light of Asia’s continued volatility, another attack on the rand could hit the markets.
At close of markets, the all share index had fallen 54 points to 7516. The financial index shed 72 points in late trade to close at 13330, and the industrial fell 37 points to 9087. The all gold index dropped a further 8 points to 895. Merrill Lynch, Smith, Borkum, Hare trader David Fell said that, although the panic appears to have left the market, he expects the bear run to continue on Friday. The bond market reacted more positively to Stals’ decision to cut the repo rate by a marginal 50 basis points to 17,5% on Thursday morning. The move served to calm fears of an early rise in interests, but the markets remained volatile. The R150 close at a 13,860% yield, from a previous close of 13,950%. The R153 ended stronger on 14,085%, up from Wednesday’s close of 14,190%.
The rand also reacted positively to Stals’ announcement, gaining some ground in the morning. By 4.30pm, however, it had slipped slightly against the dollar to close at R5,1155 to the unit, slightly weaker than Wednesday’s close of R5,1080.
Gold was quoted at $293,15 an ounce when local markets closed at 4.30pm.