JSE firms as banking sentiment lifts
The JSE closed firmer on Tuesday in line with the global trend as markets welcomed efforts to halt further turmoil in the banking sector.
Market sentiment improved after news that First Citizens BancShares will buy the bulk of failed Silicon Valley Bank’s business. Bloomberg reported that deposit outflows from small banks to industry giants such as JPMorgan Chase and Wells Fargo had slowed in recent days. Policymakers have acted to alleviate recent challenges in the sector. Bloomberg reported that US authorities were considering expanding an emergency lending programme for banks, which could give First Republic Bank more time to shore up its liquidity.
First Republic, with a business model similar to Silicon Valley Bank, has been a concern. Its share price plunged more than 46% last week as investors considered whether a plan from a group of banks could bolster its balance sheet, reports Bloomberg. The shares have since rebounded.
“Equity markets are edging higher, perhaps a sign of gradually improving confidence after a relatively dramafree weekend,” said Oanda senior market analyst Craig Erlam.
“Every passing day rebuilds confidence and allows investors to feel a little bit more relaxed.”
The JSE all share ended the session 1.01% higher at 76,047 points, led by precious metals (2.78%), resources (2.36%), industrial metals (1.59%), financials (1.53%) and banks (1.51%). The Top 40 gained 0.95%.
At 6.46pm, the Dow Jones industrial average was 0.12% at 32,471.97 points, though the S&P 500 was down 0.21%. In Europe, London’s FTSE 100 closed 0.17% firmer, while France’s CAC 40 added 0.14% and Germany’s DAX was little changed. On Wednesday, US Federal Reserve’s vice-chair Michael Barr testifies to the US Senate, where he is expected to discuss recent banking troubles.
The rand and other emergingmarket currencies firmed as risksensitive units recovered some lost ground. “There’s a cautious pivot from safe-haven assets to riskier assets as fears of an imminent banking crisis start to dissipate,” said Citadel Global director Bianca Botes. “US government regulators have reiterated that the banking system is stable, while promising additional liquidity.”
At 5.50pm, the rand had strengthened 0.91% to R18.1482/$, 0.45% to R19.6628/€ and 0.36% to R22.4006/£. The euro was 0.42% firmer at $1.0841. Gold gained 0.61% to $1,967.99/oz, but platinum eased 0.19% to $969.65/oz. Brent crude was 1% firmer at $78.50 a barrel.