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Johannesburg - The JSE was decidedly weaker at noon on Wednesday, weighed down by the Moody's downgrade of SA's outlook from stable to negative, while rising Italian borrowing costs added to the negative investor sentiment.
The rand slid to 7.96 to the dollar, from 7.85 at the JSE's close on Tuesday. Gold traded at $1 782.75 a troy ounce from $1 794.91/oz at the JSE's previous close, while platinum was at $1 651.20/oz, from $1 669.20/oz previously.
Moody's Investor Service changed the outlook on SA's A3 local and foreign currency government debt ratings to negative from stable, reflecting heightened political risk in the context of more constrained public finances.
The negative outlook also applies to the country's A1 foreign currency debt ceiling and its A3 foreign currency deposit ceiling.
Viv Govender, market analyst at Vunani Private Clients Services, said the implications of these ratings meant that it would be potentially expensive for SA to borrow money in capital markets.
"Investors will demand high premiums before subscribing to, for instance, state-owned enterprises such as Eskom for its capital programmes."
While Berlusconi's resignation was welcome, the lack of clarity on the timing of the resignation and the potential for a new government remained a concern. Meanwhile, Greece continued to be in focus, with the new government expected to be announced later on Wednesday.
London's FTSE 100 was down 0.99% to 5 512.02 points.
Earlier, Asian stock markets closed mostly higher, with shares in China rising after data showed easing inflation pressures.
South African blue chip stocks fell sharply, dragging the benchmark Top 40 - (Tradeable) [JSE:J200] index down more than 2% as investors worldwide dumped riskier assets on resurgent worries about the eurozone debt crisis.
The JSE Top 40 index dropped 2.02% to 28 728.84 by 11:30 GMT and the broader All Share [JSE:J203] index lost 1.83% to 32 073.76.
European stocks were lower at midday on Wednesday as mounting concerns over Italy’s debt kept investors on edge, following an early rally sparked by Silvio Berlusconi’s pledge to step down as Italy’s prime minister.
The rand slid to 7.96 to the dollar, from 7.85 at the JSE's close on Tuesday. Gold traded at $1 782.75 a troy ounce from $1 794.91/oz at the JSE's previous close, while platinum was at $1 651.20/oz, from $1 669.20/oz previously.
Moody's Investor Service changed the outlook on SA's A3 local and foreign currency government debt ratings to negative from stable, reflecting heightened political risk in the context of more constrained public finances.
The negative outlook also applies to the country's A1 foreign currency debt ceiling and its A3 foreign currency deposit ceiling.
Viv Govender, market analyst at Vunani Private Clients Services, said the implications of these ratings meant that it would be potentially expensive for SA to borrow money in capital markets.
"Investors will demand high premiums before subscribing to, for instance, state-owned enterprises such as Eskom for its capital programmes."
While Berlusconi's resignation was welcome, the lack of clarity on the timing of the resignation and the potential for a new government remained a concern. Meanwhile, Greece continued to be in focus, with the new government expected to be announced later on Wednesday.
London's FTSE 100 was down 0.99% to 5 512.02 points.
Earlier, Asian stock markets closed mostly higher, with shares in China rising after data showed easing inflation pressures.
