JSE faces downgrade and lockdown threats on Friday

The JSE could take its lead from firmer Asian markets on Friday and extend gains for a fourth-consecutive session, even as a 21-day lockdown begins and the possibility of junk status looms. 

Ratings agency Moody’s Investors Service is scheduled to give its review of SA’s credit rating later, with the local bourse boosted this week by stimulus measures abroad and at home.

A huge $2-trillion (R34-trillion) stimulus bill in the US has resulted in a surge in equity markets in that country, while locally, the Reserve Bank has begun buying bonds in the secondary market to support liquidity.

US markets have had their best three-day winning streak since the 1930s this week, CNBC reported, with markets shrugging off dismal jobs data on Thursday — when data showed jobless claims topped 3.2-million last week.

“We’ve never seen weekly jobless claims at these levels before — they are more than four times greater than the prior high set in October 1982 and double the 1.5-million forecast,” said BK Asset Management MD for foreign exchange strategy Kathy Lien in a note.

Lien noted, however, that US Federal Reserve chair Jerome Powell gave a rare broadcast interview in which he said the Fed was “not going to run out of ammunition.”

Asian markets were mostly higher on Friday morning, with Hong Kong’s Hang Seng up 1.21%, while the Shanghai Composite had risen 1.41%.

Tencent, of which Naspers is the largest single shareholder, had risen 0.47%.

Gold was down 0.34% to $1,623.03/oz while platinum had risen 1.46% to $745. Brent crude was 0.89% down at $26.41 a barrel.

The rand was 0.11% firmer at R17.30/$, while weakening 0.85% to R21.22/£.

The rand has gained against the dollar recently, but weakened against the pound and euro, due to market hopes of more US monetary support on the back of the Fed’s pledge to apply unlimited stimulus, said Peregrine Treasury Solutions treasury partner Bianca Botes in a note.

Investors have recently sought safety in the dollar due to the coronavirus pandemic, though the Fed’s policy of stimulus has helped ease fears of a dollar shortage.

There is little on the local corporate or economic calendar on Friday, and focus is instead on Moody’s and lockdown related news.

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