5 things you need to know before the JSE opens today
·29 Jan 2016
Here is what’s happening in the markets today:
- The South African Reserve Bank has hiked rates by 50 basis points, taking the repo rate to 6.75% and the prime lending rate to 10.25%. The bank flagged a bleak year ahead for South Africans, with economists saying that the rate hike will do little to solve the country’s problems, and that consumers should expect another rate hike – as high as 75bp – coming in the months ahead.
- Despite pessimism from economists, the rand rallied to its strongest level in three weeks following the rate hike from SARB. Following the announcement, the rand strengthened to R16.16 to the US dollar, closing the day at R16.19. In early trade on Friday, the rand strengthened even more, currently trading at R16.09 to the dollar, R23.16 to the pound, and R17.55 to the Euro.
- In global markets, Asian stocks climbed on Friday as the Bank of Japan stunned the market by adopting negative interest rates to try re-inflate its economy. Wall Street stocks also climbed higher, thanks to Facebook’s stellar results, which drove tech shares higher. The global oil price also saw a slight increase, which boosted energy stocks.
- South Africa’s mining sector is facing yet another crisis: the mining ministry has said that 32,000 workers in the mining sector could be losing their jobs, which does not make good news for a country with high unemployment rates. The mining sector employs more 400,000 people, and has been hard-hit by a slump in commodity prices and slowdown in demand from China.
- Meanwhile, the gold price has steadied following recent gains that lifted the metal to its highest level since November. The metal is on track to end January with its strongest monthly climb in a year.
In other news: South Africa’s maize prices eased on Thursday following government harvest estimates beating market expectations. Prices for maize doubled in 2015 as South African crops suffered due to drought conditions.
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