5 things you need to know before trading opens today
·3 Jun 2016
Here’s what is happening in the markets:
- Today is D-day for South Africa’s credit rating, as ratings firm Standard & Poor’s is expected to deliver its verdict. The firm has South Africa at one notch above junk with a negative outlook, and a downgrade would mean junk status for the country – and all the economic woes it brings along with it. Finance minister Pravin Gordhan is confident the country will avoid the cut – but many economists have said that we should anticipate the worst.
- Old Mutual is getting flak for a proposal to give its CEO Bruce Hemphill a “unique” 3-year incentive which could see him take home a bonus 1000% bigger than his salary. With a guaranteed salary of GBP900,000 (R20.2 million) this means he could walk off with GBP9.9 million (R222 million) as a bonus – which is raising eyebrows with shareholders.
- South African assets firmed on Thursday as global investors became less adverse to risk, but the rand looked vulnerable to a credit rating review from Standard & Poor’s due on Friday. Stocks recovered after skidding lower for two sessions in a row, while bonds were mixed. On Friday the Rand was trading at R15.57 to the dollar, R22.44 to the pound and R17.37 to the euro.
- In global news, Asian shares advanced on Friday as investors looked to US employment data that could add to or detract from the case for a Federal Reserve interest rate hike this month or in July. Wall Street closed slightly higher on Thursday as fresh data gave a rosier view of the economy and further gains for healthcare shares countered declines in energy names.
- Brent oil prices held around $50 a barrel on Friday following an OPEC meeting that failed to agree on output targets, but which was seen as supportive as Saudi Arabia pledged not to flood the market with more fuel. Brent crude oil futures held, trading at $49.99 per barrel,while US oil was trading down at $49.08.
In other news: The ANC has submitted close to 10,000 names in its 2016 elections list, while secretary general Gwede Mantashe has doubled down on the party’s focus on the elections. He controversially stated that nothing should overshadow the elections in 2016, from buzz around Jacob Zuma, to talk of state capture and even political killings.
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