MARKET WRAP: JSE snaps four day losing streak as budget surprises markets

The JSE had its first day of gains in four while the rand firmed, brushing off coronavirus worries, as investors cheered the government’s plans to reduce spending. 

Finance minister Tito Mboweni delivered the national budget speech on Wednesday which saw the rand pare losses after Mboweni announced the government’s plans for a R160.2bn reduction to the wage bill over the next three years.

“The content of the speech exceeded our expectations.  We would like to have seen more detail on Eskom and SAA and presume that tough discussions are still underway at this stage.  The economy suffers from a number of pressure points.  The budget can only do so much and that was achieved.  The strong defense of the independence of the central bank will also reassure markets,” said  fund Manager at Anchor Capital, Nolan Wapenaar.

At 5.20pm, the rand had strengthened  0.69% to R15.1159/$, 0.81% to R16.4177/$ and 1.15% to R19.5327/£. The euro had weakened 0.17% to $1.0862.

“If you had a look at the price action pre-budget, the market had a fair amount of negative news priced in. I think the market was pleasantly surprised with today’s budget, and it shows commitment from government to turn this ship around.” Rand Merchant Bank fixed income analyst Michelle Wohlberg said. 

Gold lost 0.13% to $1,632.39/oz and platinum 1.58% to $909.62. Brent crude was down 0.42% to $54.75 a barrel. 

A surge in coronavirus cases outside of China continued  to cast a shadow over global equities. Reuters reported that the first case had been confirmed in Brazil on Wednesday,while the virus has also spread to Italy, South Korea and Iran. 

Shortly after the JSE closed, the Dow was up 1.17% to 27,397.07 points. In Europe, the FTSE 100 was down 0.83%, France’s CAC 045% and Germany’s DAX 0.61%. 

Earlier, the Shanghai Composite 0.83%, Hong Kong Hang Seng 0.73% and Japan”s Nikkei 225 0.79%. 

The JSE all share gained 0.43% to 55,047.20 points and the top 40 0.40%. Banks climbed 6.21%% and general retailers 4.80%. 

Automotive group Motus reported headline earnings per share of 517c in the six months ended December, which is an increase of 9%. Its share price had dropped 1.29% to R77.

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