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Cape Town - The JSE ended flat on Thursday, as the rand and government bonds weakened slightly, due to market stakeholder concerns that President Jacob Zuma could survive the resistance building against him.
The mildly weaker rand combined with severe market uncertainty, regarding the political future of South Africa, capped trading volume. At the close of the JSE the rand was trading at R13.80 to the greenback with banking shares and retailers, once again, the biggest losers on the JSE.
In terms of the market movements; the blue chip JSE Top 40 gained +0.04% for the day, whilst the broader All Share Index weakened by +0.14%. The Resources Index firmed +0.08% whilst the Industrial Index closed +0.33% higher. The banks faced further weakness as the Financial Index sank -0.67% lower.
International
US President Donald Trump will be hosting his Chinese counterpart at his luxurious Mar-a-Lago resort in Florida. The event will be the first time that Trump meets China's Xi Jinping, with markets waiting in anticipation for news as to what the future holds for the world’s two largest economies. According to Trump’s spokespeople, the meeting will be used to discuss trade imbalances, jobs, currency manipulation, ‘one-China policy’, and the threat of North Korea's nuclear programme.
European markets recovered from yesterday’s dip, with the DAX ending flat and the CAC 0.47% up before the close of market. Markets could breathe a sigh of relief as Mario Draghi came to the rescue by announcing that the ECB will not follow the Fed and will maintain their monetary policy, as they have not yet seen sufficient evidence to materially alter their policy.
The ECB has added 10% to their balance sheet in the first quarter of the year, and are on par with the Federal reserve with $4.5tn in assets.
By the close of the JSE, the S&P500 firmed by +0.21% managing to claw back some of the losses it experienced on Wednesday. Global markets sank as risk appetite was soured by minutes released from the Federal Reserve’s March meeting.
Minutes pointed to signs that the Fed is looking to further unwind quantitative easing by shrinking the central bank's $4.5B balance sheet. The announcement cuts the probability of early US fiscal stimulus as House Speaker Paul Ryan said changing tax policy could take longer than overhauling healthcare.
Commodity markets
Gold weakened -0.17% to $1252.51 as prices came off slightly during the day on the back of the recovery in the US equity markets.
Market participants are awaiting US Non-Farm payroll data to be released on Friday. The data is expected to be positive, on the back of Wednesday’s ADP data, and could boost US equity markets and the US dollar index, reducing the demand for gold.
Brent Crude Oil edged +0.79% higher to $54.78/bbl - its fourth consecutive daily gain. Oil has experienced a short-term rally after recovering from losses on the news that cuts in production by Opec, as well as multiple global disruptions to oil supply had managed to dent record high US oil inventories.
*This report is from the Trading Desk at EasyEquities, Fin24's latest content partner on equities and market moves.
