Business

5 things you need to know before trading starts today

Staff Writer

 ·28 Jan 2016

Here’s what’s happening in the markets:

• The South African Reserve Bank will announce its decision on interest rates at 13h00 today (28 January). Markets expect a rate hike of at least 50 basis points on the back of a weakening rand and volatile economic conditions – though some economists say it could be as high as 75bp, and it won’t be the last hike for the year.

• The South African rand remained strained against the US dollar in trade on Wednesday ahead of the SARB rate announcement, losing out on gains made earlier in the day. It closed the day trading at R16.48 to the dollar, and in trade early Thursday morning strengthened slightly to R16.43. It is trading at R23.41 to the British pound, and R17.89 to the Euro.

• Rating agency Moody’s says there is little hope on the horizon for South Africa’s mining sector, which won’t return to normality for years to come. The sector, which has been a key driver for South Africa’s economy for over a century, has been hard-hit in recent years by labour unrest, slowing global demand, and tough local economic conditions. This “severe downturn” is indicative of a fundamental shift in the operating environment, the group said.

• Despite all indicators pointing to a rating downgrade and a likely recession in South Africa, the ANC government says that it will take action to avoid such an eventuality at all costs. Secretary General Gwede Mantashe gave a vague plan of action following a three day meeting, saying that the country would have to “engender consensus” among all players to stabilise the economy, save jobs, and restore fiscal sustainability and credibility.

• In global markets, US stocks dropped sharply with no sign from the Federal Reserve that it may scale back interest rates. Asian markets strengthened as investors moved back into equities, looking for “safe-haven assets”.

In other news – professional services firm, Deloitte says that South Africa is likely to see a jump in personal tax rates (particularly for the wealthy) and the start of a carbon tax as sourced of additional revenue. This is predicted to be included Pravin Gordhan’s budget speech in February.