South African futures were fractionally higher on Friday as the Dow was only just in positive territory shortly after opening, while the JSE closed very slightly lower.

Retail, banking and financial shares came under the most pressure on the JSE following the decision by the Reserve Bank on Thursday to leave the repo rate unchanged at 6.75%.

About a third of analysts polled had expected a cut of 25 basis points as the rand has strengthened significantly since the election of Cyril Ramaphosa as the ANC’s new president in mid-December.

The stronger rand helps lower inflation, but as the Bank’s governor Lesetja Kganyago highlighted, the economy still faced a number of risk events.

Finance Minister Malusi Gigaba is set to deliver the annual budget speech in Parliament on February 21. In his medium-term budget policy statement in October last year, Gigaba highlighted a R50bn budget deficit, without detailing any plans to resolve the issue.

Rating agency Moody’s is set to announce the result of its latest review of SA’s credit rating shortly after the budget speech. If it downgrades the country’s debt to junk, it will join the other two large ratings providers, S&P Global and Fitch. The result could be a large sell-off of South African bonds, which poses a risk to the rand, and therefore inflation.

At 5.58pm, the Dow was up 0.02%, with European markets also in positive territory. The DAX 30 had added 1.09%, the FTSE 100 0.35% and the CAC 40 0.57%.

At the same time, platinum was up 1.01% to $1,011.95 an ounce and gold 0.5% to $1,333.24. Brent crude was off 0.57% to $68.70 a barrel.

The top-40 Alsi futures index gained 0.04% to 54,500 points. The number of contracts traded was 11,857 from Thursday’s 15,684.

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