Here is what’s happening in the markets:
- Despite statements from government saying the contrary, the World Bank says that the current “political crisis” in South Africa is a major drag on the economy. The global finance group previously lowered its growth forecast for SA to below 1% for 2016. South Africa has been marred by mounting calls for president Jacob Zuma to step down. Government has laid the blame for slow economic growth at the feet of lower platinum, iron ore and coal prices, as well as an ongoing drought.
- Former finance minister Nhlanhla Nene has a new job – but it’s not head of the BRICS bank as president Jacob Zuma told the nation when he fired him from his ministerial position. In December 2015, Zuma used the BRICS bank position as justification for replacing Nene with Des van Rooyen – a move which wiped R500 billion from the SA economy. Speaking to eNCA, Nene revealed that he is now working in the private sector.
- South Africa’s rand rallied to its firmest in one week on Monday as sentiment toward emerging markets was lifted by positive signs from Chinese data, while stocks were mostly flat. On Tuesday, the currency was trading at R14.72 to the dollar, R20.94 to the pound and R16.80 to the euro.
- In global news, Asian stocks rose on Tuesday, led by a rebound in Japanese stocks, while commodities such as crude oil stood tall thanks to a sagging dollar. Wall Street closed slightly lower on Monday, with gains in materials and banks countered by declines in consumer staples shares, as investors girded for the start of an earnings season expected to be gloomy.
- Oil prices dipped on Tuesday, but both US and international crude futures held above $40 per barrel ahead of a meeting of major producers to discuss freezing output levels to rein in ballooning oversupply. US crude futures were trading at $40.27 per barrel, down 9 US cents, while Brent crude futures were at $42.70 a barrel, down 13 US cents.
In other news: Treasury has added to the pile of Gupta scandals, saying that a deal between state-owned defence and military group Denel and Gupta-owned VR Laser Asia was never approved, and thus illegal. The message from Treasury contradicts statements from the group saying it went through all legal checks before proceeding.