Here’s what is happening in the markets:
- Despite S&P Global’s hold on South Africa’s credit rating, weak economic data is expected out on Wednesday reigniting recession fears. Stats SA is expected to release Q1 GDP data showing a contraction for the first quarter of 2016. This, while business confidence in the country has shrunk as consumer spending slowed.
- Ratings firm Fitch is expected to deliver its assessment of South Africa’s credit rating today. Economists have predicted that like S&P, the group will hold the country at one notch above junk at BBB-, but will change their outlook from stable to negative. The agency has warned government to steer clear of populist “quick fix” decisions ahead of the 2016 elections which could put the economy at risk.
- South Africa’s rand firmed late on Tuesday as investors continued to push back bets of an interest rate hike in the United States, although gains were restrained ahead of local growth data and a ratings decision by Fitch. Stocks closed higher as the firmer currency boosted companies with predominantly local operations. On Wednesday the rand was trading at R14.93 to the dollar, R21.69 to the pound and R16.98 to the euro.
- In global news: Asian shares were flat on Wednesday, as weak Chinese export data offset a brightening energy sector outlook and an expected delay in interest rate hikes by the US Federal Reserve. The S&P 500 ended at its best level since July on Tuesday, helped by a big jump in energy shares and investor confidence that higher interest rates will not derail the economy.
- Oil prices stood steady near their highest level in about eight months on Wednesday, helped by industry data showing a larger-than-expected draw down in US crude inventories and by worries about attacks on Nigeria’s oil industry. Crude oil futures traded above the psychologically important $50 mark, touching a 2016 high, supported by a weaker US dollar, which wallowed near a four-week low.
In other news: SABC COO Hlaudi Motsoeneng has dared detractors to challenge his policy to censor “violent protests” on the public broadcaster, saying they will never succeed. The COO said that the policy was born from experience: “when protesters see cameras, they start burning,” he said.