JSE on track for weekly gain on Friday as Moody’s threat looms

The JSE could take its lead from firmer Asian markets on Friday morning, with the local bourse up 2.3% so far in the week, despite weakness in the rand. 

The local currency has fallen almost 3% against the dollar so far during the week, battered by the Treasury’s warnings that SA’s debt will grow over the next few years, even as it slashes its growth forecast for 2019.

All eyes are on the latest review of SA by Moody’s Investors Service, although this is likely to take place after markets close. Analysts have said the chances of SA being downgraded to junk status in coming months has risen, although Moody’s is expected to only change SA’s outlook to negative later.

Some volatility may also come from the major global economic release, US nonfarm payrolls for October.

Asian markets were higher on Friday morning, boosted by a higher-than-expected Chinese purchasing managers index (PMI) for October.

At 6.10am the Shanghai Composite was up 0.73% and Hong Kong’s Hang Seng 0.42%.

Gold had slipped 0.14% to $1,510.40/oz while platinum was flat at $931.88/oz. Brent crude was 0.41% higher at $58.96 a barrel.

The rand was 0.34% firmer at R15.05/$.

Naspers has fared well this week, recovering from a 9% drop last week, and largely tracking the movements of Chinese tech giant Tencent, of which it owns 31.2%.

Locally, there are no major scheduled corporate releases, with focus instead on Moody’s.

The Absa manufacturing PMI later is expected to show a subdued start to SA’s fourth-quarter.

The PMI has averaged 46.6 in the first three quarter of the year, below the neutral 50 mark that separates expansion from contraction, Investec economist Kamilla Kaplan said in a note last Friday. Conditions in the sector are affected by weak domestic and external demand, she said.

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