The JSE may benefit from optimism on global markets on Thursday, amid promises of continued stimulus from the US Federal Reserve and hopes regarding a viable Covid-19 treatment.

The rand rallied more than 2% overnight, with the Fed saying extraordinary policy measures will remain until the US economy is in recovery mode. Sentiment has been boosted further by reports that Gilead Science’s remdesivir may be approved for emergency use after trials showed patients responded when treated early.

Optimism globally was overshadowing SA’s forthcoming fall from the World Government Bond Index on Friday, said Peregrine Treasury Solutions executive director Bianca Botes in a note.

Late on Wednesday, S&P Global Ratings downgraded SA deeper into junk status, citing the government’s debt burden and the economic fallout from the Covid-19 pandemic.

The rand took the news in its stride, reflecting that many of the concerns raised by the ratings agency were already well-recognised, Sasfin Wealth fixed-income trader Alvin Chawasema said in a note.

In morning trade on Thursday, the Shanghai Composite was up 1.3% and Japan’s Nikkei almost 3%.

Gold was flat at $1,711.59/oz, while platinum was up 0.43% to $7796.80. Brent crude had gained 8.63% to $24.63 a barrel, on track for a third day of recovery.

The rand was 0.16% higher at R18.16/$, putting it on track for its fifth consecutive day of gains, with the currency reaching a two-week high on Wednesday. The local currency has fallen 22% against the dollar so far in 2020.

Focus on Thursday is on the European Central Bank policy announcement, while eurozone GDP data for the first quarter is also due, as well as US jobs data.


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