MONDAY, 5.30PM:
THE Johannesburg Stock Exchange was on the defensive on Monday, with a quiet market holding its breath for developments from Asia, the New York stock exchange, and moves in the local repo rate.
Barnard, Jacobs, Mellet dealer Echardt van der Hoven said the market started off on a weak footing, with the Hong Kong stock falling 5,7%, and fed off the negative sentiment. The currency markets also fed the bearish mood, with the rand falling as low as R5,4 to the dollar as a very nervous market holds out for “Traders were trying to put the day to bed without having too many positions open over the long-weekend,” head of trading at Deutsche Morgen Grenfell, Chris Wilde, said.
At close of markets the all share index had lost 192 points to close at 6720, from Friday’s close of 6912. The financial index dropped 393 points to close at 12034, while the industrial index closed 214 points down at 8094. The all gold index closed on 773, 20 points off Friday’s close of 793.
“There is a feeling that the market is getting to new lows, which should see some nibbling coming in,” Wilde said. Van der Hoven confirmed this sentiment, adding that there is both the indication that investors are not prepared to sell at these levels, while others are trying to pick up some cheap stock. The bond market, bolstered by interest rate hikes and immune to foreign exchange volatility, closed stronger as institutions started short-covering once the yield on the benchmark R150 bond went below 14,50%. The market saw a number of switches taking place as the perception grew that last week’s 14,94% yield on the R150 was the top.
The spread between the medium-dated R150 bond and the longer-dated R153 had widened to 21 points this afternoon from only a 7-point spread this morning. Before May’s market turmoil the spread sat at 30 basis points. The R150 closed at a 14,450% yield, after Friday’s close of 14,660% while the R153 ended on a 14,545% yield, up on Friday’s close of 14,750%.
The currency market took another battering on Monday, hitting an record low of R5,4 to the dollar before it crawled up to close at R5,2700. In a terrifyingly wide day’s trade, dealers tried to fuel the currency off speculation that a repo rate hike from 17% may come on Monday to fight off renewed speculation against the rand. The Reserve Bank offered liquidity in the market, but was extremely careful not to spend too much money trying to bolster the rand.