Johannesburg - The G20 statement over the weekend made promises of future initiatives on global financial regulation and monetary and fiscal stimulus to help global demand, but there was nothing concrete, said Barclays Capital's South African economists in a note on Monday.
"International markets may have gone into the weekend hoping for at least something in terms of joint fiscal or monetary stimulus," they said.
In addition, there may also be some disappointment that additional funds for the IMF were not promised and that China and Saudi Arabia emphasised stimulating domestic demand as their contribution to global recovery rather than pledging funding to the IMF for programmes.
"Japan had announced ahead of the meeting that they would provide an additional $100bn towards this end, which may have got the market's hopes up of more substantial action," said the economists.
A local bond dealer said on Monday that no real direction had
been provided by the G20, and the market would take its direction from the rand and the US later today.
The vulnerability of Africa's economy in light of the food and commodity price volatility caused by the developed world credit crisis came under the spotlight over the weekend at the G20 Leaders' Summit on Financial Markets in the US.
More job losses
South Africa's Presidency said in a press release after the meeting that while African economies were making progress, they are now threatened by the global financial crisis.
Dominique Strauss-Kahn, managing director of the International Monetary Fund, hailed the Group of 20 leaders' call for further fiscal stimulus on Saturday and said that coordinated action is urgently required on that front.
The US Congress will meet this week to consider ways to help the ailing auto industry, among other items, and any news on this front may provide more of a spark for local markets.
US stocks futures are higher on Monday, after markets ended lower on Friday in a late selloff prompted by more discouraging outlooks from consumer and technology companies, including Nordstrom, JC Penney and Nokia, according to Dow Jones Newswires.
South Africa's central bankers meet on December 11 to decide on interest rates and the market is not generally expecting a cut at that time. However, the key piece of data will be October CPI on November 26 where a larger-than-expected fall could raise hopes of a cut in light of recessionary conditions in the retail and vehicle markets locally and slowdown in borrowing.
The threat from the financial crisis to prices will also need to be weighed, if more evidence of job losses comes to the fore.
- I-Net Bridge