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Johannesburg - The JSE was 136 points softer in early trade on Friday morning as the Cypriot banking crisis continued to weigh on sentiment. The banks and industrial sectors led the downside‚ but a deal in the pharmaceutical sector created some buying interest.
The SA market was closed on Thursday for Human Rights Day‚ and local traders said conditions may be quiet as many investors went on holiday and are only expected back at their trading desk after Easter on April 2.
At 9:40am the All Share [JSE:J203] index was 0.34% softer at 40‚182.41 points‚ with the blue-chip JSE Top 40 - (Tradeable) [JSE:J200] index giving back 0.43%.
Gold and resources provided support‚ but was offset by losses in the banking and industrial spaces‚ receding 0.96% and 0.88% respectively.
In Asian markets Japan shares fell‚ with the Nikkei closing 1.94% lower at 12.338 points and the Hong Kong Hang Seng index last seen 0.45% weaker. This follows on news that Cyprus’ bailout request was rejected by Russia and new Bank of Japan Governor Haruhiko Kuroda failed to announce fresh stimulus.
On the international front the Cyprus banking crisis remains a concern.
“They have until Monday to come up with a new bailout plan or face being cut off from European Central Bank cash and therefore collapsing and being forced to exit the eurozone. We have become used to last minute eurozone solutions but this is really starting to push it‚” Rand Merchant Bank said in a note.
Dow Jones Newswires reported that Cypriot Finance Minister Michalis Sarris left Moscow on Friday after two days of talks aimed at securing Russia's economic aid‚ a diplomatic source said without disclosing whether an agreement was reached.
Markets are however slightly less sanguine on the prospects of contagion from Cyprus.
“The Cypriot authorities announced plans to restructure one of its major lenders and guarantee deposits below €100 000‚” Barclays Research said in a note.
The Cypriot Parliament is expected to discuss a new banking bill on Friday. This follows reports that the European Central Bank would withdraw its emergency liquidity assistance programme by next Monday if an agreement has not been agreed‚ the bank said.
