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Johannesburg - Share prices on the JSE on Tuesday just managed to stay in the black, despite economic news on a wide front showing that worldwide growth is slowing down.
The news was however not as bad as originally expected and its implications are probably discounted already.
In a climate of struggling growth and lower inflation (even in South Africa due to the weak rand) there is also now talk of lowering local interest rates instead of hiking them further, although it will not happen as soon as the next meeting of the South African Reserve Bank’s monetary policy review committee. Lower interest rates will however be bad for the struggling rand.
READ: Interest rate cut could be looming
By midday the All-share index was only 0.18% higher at 49 083 points while the Top 40-index was at one stage 0.17% higher at 43 061 points. All the other major indices were higher, albeit only barely.
The top indices opened firmly, but the intraday graphs showed a gradual decline for most of Tuesday morning. By midday the indices seemed to be hanging on.
The International Monetary Fund lowered its forecast for global economic growth in 2015. Global growth is projected at 3.5% for 2015 and 3.7% for 2016, the IMF said in its latest World Economic Outlook report, lowering its forecast by 0.3 percentage points for both years.
The IMF’s forecasts are however far rosier than World Bank predictions last week that the global economy would grow 3% this year and 3.3% in 2016.
READ: IMF: Global outlook glum despite oil tumble
It was also announced on Tuesday that the Chinese economy expanded 7.4% in 2014.
While the figure is down from 7.7% the previous year and is the weakest since 1990, it is however still higher than the median forecast of 7.3% in an AFP survey.
The IMF advised advanced economies to maintain accommodative monetary policies to avoid increasing real interest rates as cheaper oil heightens the risk of deflation. If interest rates could not be reduced further, the IMF recommended pursuing an accommodative policy "through other means".
It is these “other means” that the markets are expecting as they are waiting for the European Central bank to announce new stimulatory measures for the eurozone as early as this week.
Among the heavyweights on the JSE, stocks of international companies with worldwide activities were a mixed bag. SABMiller [JSE:SAB] lost 1% to trade at R590.03 but Naspers [JSE:NPN] gained 0.88% to R1 596.00.
Richemont [JSE:CFR], which was one of the busiest shares on the JSE on Tuesday in terms of volume and value, was 0.49% higher at R97.64. More than 2.05 million shares were traded for R201m. The share is however still 3.9% lower over the last seven days and more than 6% weaker over the last 30 days.
More than 2.2 million Steinhoff [JSE:SHF] shares were sold by midday for R135m and the share price was 0.68% higher at R59.40.
The oil price was again on the decline on Tuesday morning after a rally over the weekend, and Brent traded 0.47% lower at $48.74. The share price of Sasol [JSE:SOL] responded to the drop by losing another 3.75% to R381.14.
The news was however not as bad as originally expected and its implications are probably discounted already.
In a climate of struggling growth and lower inflation (even in South Africa due to the weak rand) there is also now talk of lowering local interest rates instead of hiking them further, although it will not happen as soon as the next meeting of the South African Reserve Bank’s monetary policy review committee. Lower interest rates will however be bad for the struggling rand.
READ: Interest rate cut could be looming
By midday the All-share index was only 0.18% higher at 49 083 points while the Top 40-index was at one stage 0.17% higher at 43 061 points. All the other major indices were higher, albeit only barely.
The top indices opened firmly, but the intraday graphs showed a gradual decline for most of Tuesday morning. By midday the indices seemed to be hanging on.
The International Monetary Fund lowered its forecast for global economic growth in 2015. Global growth is projected at 3.5% for 2015 and 3.7% for 2016, the IMF said in its latest World Economic Outlook report, lowering its forecast by 0.3 percentage points for both years.
The IMF’s forecasts are however far rosier than World Bank predictions last week that the global economy would grow 3% this year and 3.3% in 2016.
READ: IMF: Global outlook glum despite oil tumble
It was also announced on Tuesday that the Chinese economy expanded 7.4% in 2014.
While the figure is down from 7.7% the previous year and is the weakest since 1990, it is however still higher than the median forecast of 7.3% in an AFP survey.
The IMF advised advanced economies to maintain accommodative monetary policies to avoid increasing real interest rates as cheaper oil heightens the risk of deflation. If interest rates could not be reduced further, the IMF recommended pursuing an accommodative policy "through other means".
It is these “other means” that the markets are expecting as they are waiting for the European Central bank to announce new stimulatory measures for the eurozone as early as this week.
Among the heavyweights on the JSE, stocks of international companies with worldwide activities were a mixed bag. SABMiller [JSE:SAB] lost 1% to trade at R590.03 but Naspers [JSE:NPN] gained 0.88% to R1 596.00.
Richemont [JSE:CFR], which was one of the busiest shares on the JSE on Tuesday in terms of volume and value, was 0.49% higher at R97.64. More than 2.05 million shares were traded for R201m. The share is however still 3.9% lower over the last seven days and more than 6% weaker over the last 30 days.
More than 2.2 million Steinhoff [JSE:SHF] shares were sold by midday for R135m and the share price was 0.68% higher at R59.40.
The oil price was again on the decline on Tuesday morning after a rally over the weekend, and Brent traded 0.47% lower at $48.74. The share price of Sasol [JSE:SOL] responded to the drop by losing another 3.75% to R381.14.
