5 important things you need to know before trading opens today
·24 Feb 2016
Here is what’s happening in the markets:
- It’s budget day, and all things are go for finance minister Pravin Gordhan’s budget speech set to take place today at 14h00. President Jacob Zuma met with Gordhan on Tuesday to go over the final touches to the budget, with the president saying Gordhan “did his best”, considering the difficulties faced by South Africa.
- South Africa faces five big problems that need to be addressed in the budget speech – specifically rising government debt and spending, the looming junk status downgrade, slowing economic growth, a drop in tax revenue, and how to balance tax hikes so that there is no public backlash.
- The rand eased off its best levels in two months and South African stocks sank on Tuesday, taking their lead from other emerging markets where a rally ran out of steam. On Wednesday morning the rand was trading at R15.24 to the dollar, R21.32 to the pound and R16.77 to the euro.
- In global markets, Asian shares fell on Wednesday as oil prices skidded after Saudi Arabia effectively ruled out production cuts by major producers anytime soon, sending investors into safe-havens such as the yen. Wall Street also took a knock on the oil price slide.
- Oil prices dropped after Iran made clear it has no interest in restraining production after sanctions against it were lifted. US crude was down 2.4% to $31.14 a barrel, while Brent crude was down 1.4% to $32.80. Locally, the Central Energy Fund saw an over-recovery of 67-69 cents for unleaded and LRP fuel, and an under-recovery of 15 cents for diesel.
In other news: South Africa’s largest grocer, Shoprite posted higher trading profits, which 10.4% to R3.14 billion for the interim period ended December 2015. However, despite its success, group CEO Whitey Basson remained on the back foot, warning that South Africa’s economic woes are far from over.
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