Business

5 important things you need to know before trading opens today

Staff Writer

 ·25 Feb 2016

Here’s what is happening in the markets:

• Finance Minister Pravin Gordhan’s budget speech failed to set investors’ worlds on fire, with many of the expected “big” measures to drag the economy out of the mire skipped over. Gordhan told parliament that tax hikes should help raise an additional R18.1 billion rand in revenue in 2016/17, but there was little else to show goverment was willing to make tough calls to save the economy.

See also: The 2016 SA budget in a nutshell

• South Africa is still at risk of hitting a recession, despite the measures announced by Gordhan in his budget speech. According to experts the speech failed to address the oversold, undervalued rand – and ratings agencies, while happy with the tax hikes, say not enough was done to address growth. The country sits with a negative outlook at agencies, with at least one threatening to cut the country’s credit rating to junk status.

• The rand, meanwhile, slipped sharply after Gordhan cut his 2016 growth forecast to 0.9%, down from a previous forecast of 1.7%, citing a recent drought. The currency hit R16.20 to the dollar in overnight trade in New York, but on Thursday is trading at R15.60 to the dollar, R21.71 to the pound and R17.19 to the euro.

• In global markets, volatile oil futures caused Asian shares to slip on Thursday as a fragile recovery in crude oil unravelled. This revived anxiety about the health of the global economy, as Chinese shares skidded. US stocks mounted a late-session rally to close higher on Wednesday after an increase in oil prices helped reduce investors’ fears about banks’ vulnerability to energy companies struggling to pay their debts.

• Crude prices dipped on Thursday as strong US gasoline demand failed to counter downward pressure from global overproduction that has left storage facilities swelling with unsold oil. US crude is sitting ar $31.99 a barrel, while Brent crude is at $34.17 a barrel.

In other news: Students from North West University have been advised to leave campus, as classes have been suspended indefinitely after buildings were torched by students. Violence erupted at the university’s Mahikeng campus on Wednesday as protesting students clashed with campus security, which left several people injured.