MARKET WRAP: JSE snaps four-day losing streak as budget surprises markets

The JSE had its first day of gains in five while the rand also firmed, brushing off coronavirus worries, as investors cheered the government’s plans to reduce spending. 

Finance minister Tito Mboweni delivered the national budget speech on Wednesday which saw the rand reverse course after Mboweni announced plans for a R160.2bn reduction in the wage bill over the next three years.

“The content of the speech exceeded our expectations. We would like to have seen more detail on Eskom and SAA and presume that tough discussions are still underway at this stage. The economy suffers from a number of pressure points. The budget can only do so much and that was achieved. The strong defence of the independence of the central bank will also reassure markets,” said Anchor Capital fund manager Nolan Wapenaar.

At 5.20pm, the rand had strengthened 0.69% to R15.1159/$, 0.81% to R16.4177/$ and 1.15% to R19.5327/£. The euro had weakened 0.17% to $1.0862.

“If you had a look at the price action pre-budget, the market had a fair amount of negative news priced in. I think the market was pleasantly surprised with today’s budget, and it shows commitment from government to turn this ship around.” Rand Merchant Bank fixed income analyst Michelle Wohlberg said. 

Gold lost 0.13% to $1,632.39/oz and platinum 1.58% to $909.62. Brent crude was down 0.42% to $54.75 a barrel. 

A surge in coronavirus cases outside of China continued  to cast a shadow over global equities. Reuters reported that the first case had been confirmed in Brazil on Wednesday, while the virus has also spread to Italy, South Korea and Iran. 

Shortly after the JSE closed, the Dow was up 1.17% to 27,397.07 points. In Europe, the FTSE 100 was down 0.83%, France’s CAC 0.45% and Germany’s DAX 0.61%.

Earlier, the Shanghai Composite fell 0.83%, Hong Kong’s Hang Seng 0.73% and Japan’s Nikkei 225 0.79%. 

The JSE all share gained 0.43% to 55,047.20 points and the top 40 0.40%. Banks surged 6.21%, its biggest one-day rise in two years, with general retailers recording their biggest gain in four months, up 4.80%. 

Automotive group Motus reported headline earnings per share of 517c in the six months ended December, which is an increase of 9%. Its share price, however, dropped 1.29% to R77.

mjoo@businesslive.co.za