5 things you need to know before trading starts today
·19 May 2016
Here’s what is happening in the markets:
- The South African Reserve Bank is expected to make a decision on rate hikes today. The bank has so far raised the repo rate by 75 basis points this year to combat inflation, however analysts do not expect another rate hike to come from today’s meeting. CPI data from Stats SA shows that inflation dropped to 6.2% in April.
- Investors are feeling uneasy over an apparent power struggle for Treasury between president Jacob Zuma and finance minister Pravin Gordhan. Gordhan has openly accused government officials of manipulating state offices to harass him over alleged “espionage”. Political analysts have noted that the saga may be reaching a tipping point, which would have devastating consequences for the economy.
- South Africa’s rand regained ground on Wednesday after tumbling more than 2 percent to within a whisker of the R16.00 mark given the declining chance of a rate hike locally and jitters over the Federal Reserve’s next move. On Thursday the currency was trading at R15.88 to the dollar, R23.11 to the pound and R17.77 to the euro.
- In global news, Asian stocks fell and the US dollar stood tall on Thursday as markets scrambled to factor in the possibility of another interest rate increase by the Federal Reserve as early as June. Gold stumbled.
- Oil prices fell on Thursday, pulled down by rising UScrude inventories, a stronger dollar and surging output from Iran to Europe and Asia. Brent crude futures were down 87 cents, or 1.8 percent from their last settlement, trading at $48.06 per barrel at 0159 GMT. US crude futures were down 74 cents, or 1.5 percent, at $47.45 a barrel.
In other news: Gupta-owned resource group, Oakbay Resources, is struggling to rally its share price after the Guptas resigned as managers of the company. Investors have effectively snubbed the group – but with little effect, as the company shares remain largely held by the Gupta family.
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