Gold rally may help JSE buck global gloom
The Reserve Bank releases December’s money supply and credit growth figures, which provides a picture of the spending appetite of SA households and business
The rand appeared cheered by the UK parliament passing an amendment on Tuesday night to rule out a no-deal or hard Brexit, strengthening from $13.72/$ before the vote to trade at R13.59/$ on Wednesday morning.
The rand was at R15.56/€ and R17.80/£ at 7am.
Wednesday’s focus will be on a delegation of Chinese trade negotiators who will meet their US counterparts in the Eisenhower Executive Office Building next to the White House, making it likely President Donald Trump will make a personal appearance.
Miners may help the JSE escape a global stock market slump for a second day on Wednesday.
Whereas disappointing results from US tech companies sent the Nasdaq index down 0.81% on Tuesday, the all share index rose 1.15%.
Gold, which managed to breach the $1,300/oz level on Friday, continued its rally to trade at $1,314/oz on Wednesday morning.
Although palladium has not managed to hold on to the more than $1,400/oz level it reached on January 17, it has managed to hold its lead over gold, trading at $1,345/oz.
A stock likely to suffer when the market opens on Wednesday morning is Shoprite, which issued a trading statement at 5.30pm on Tuesday saying it expected to report on February 26 that its interim headline earnings per share (HEPS) fell by up to 26%.
The willingness of SA businesses and households to take on debt will be in the spotlight on Wednesday morning when the Reserve Bank releases December’s money supply and credit growth figures.
Investec economist Kamilla Kaplan forecast that the annual increase in private sector credit extension slowed to about 5.4% in December from November’s 5.6%.
For the year as a whole, the average growth in private sector credit extension remained relatively steady at just under 6% year on year compared with 2017. In 2018, corporate credit growth slowed, consistent with depressed business confidence and contracting rates of private fixed investment, Kaplan said in her weekly note e-mailed on Friday.
“In contrast, growth in credit extended to households lifted but remained low on a historical basis, amid elevated existing levels of consumer indebtedness, high unemployment levels and relatively tight credit criteria.”