5 things you need to know before the JSE opens today
·3 Feb 2016
Here is what’s happening in the markets:
- More signs of recession as the World Bank warned that South Africa’s growth prospects for 2016 have declined. The group forecast that South Africa’s growth would only be 0.8% this year, down from a previous forecast of 1.5%. 2017’s projection has been lowered to 1.1%, from 1.6%. The World Bank has an even bleaker outlook for the country than the IMF, which forecast growth in 2016 of 0.9%.
- Following reports from Moody’s that the SARB rate hike was a bad thing for banks, the banking and insurance sectors have taken a knock on the JSE, dragging the bourse down with it. The Financial 15 index dropped by 3.9% by Wednesday on the news, pulling the JSE blue chip top 40 down by 2.07%. South African stocks closed lower for a second consecutive day on Tuesday as demand for high-yielding assets declined.
- South Africa’s manufacturing sector is under strain, with macroeconomic factors resulting in a 4.1% decline in domestic vehicle sales last year. A stressed economy is putting pressure on consumers and businesses alike, and the weakening rand will continue to put strain on the market. Vehicle sales could fall by up to 8% in 2016 due to the rand and lower consumer confidence.
- In global markets, Asian shares tumbled on Wednesday as oil prices dropped for a third day on the back of U.S. crude stocks surging to more than half a billion barrels. U.S. crude oil fell by 22 US cents to $29.66, with experts saying it hasn’t reached bottom price yet. Brent is expected to trade between $25 and $35 this quarter before slowly recovering.
- In company news, Vodacom has reported a strong third quarter, with an 8.7% increase in group revenue and group customers growing to 65.3 million across all its operations. The group said it expects revenue growth in the fourth quarter to be lower due to the economic conditions in the country.
Currencies
- ZAR/USD – R16.26
- ZAR/GBP – R23.45
- ZAR/EUR – R17.76
In case you missed it: President Jacob Zuma has put forward a proposal that will end the ongoing Nkandla ‘pay back the money’ saga. Zuma said he is willing to pay back some of what he owes, as outlined in the Public Protector’s report on the matter.
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