JSE firms as global banking anxiety eases

The JSE tracked firmer global peers on Wednesday as anxiety about the global banking sector eased, due in part to policymakers’ efforts to secure deposits and provide liquidity.

But analysts warned of continued concern about higher rates pushing the global economy into recession.

“Markets continue to show a solid rebound as regulators continue to address fear about the banking sector,” said Matete Thulare, head of forex execution at RMB. We may be in a mini-banking crisis, but for now there seems to be little bad news to absorb, which helps sentiment,” said Thulare.

“The biggest catalyst lies in Federal Reserve expectations.”

The JSE all share firmed 0.57% to 76,480.11 points, with industrials gaining 0.97% and industrial metals 0.75%. However, banks, precious metals and financials fell 0.42%, 0.33% 0.12%, respectively. The top 40 rose 0.6%. On Tuesday, Michael Barr, Federal Reserve vice-chair for supervision, blamed the Silicon Valley Bank’s collapse on mismanagement rather than financial system vulnerabilities.

Barr told members of a US Senate panel that the bank’s executives did a terrible job of managing risk before its collapse. Legislators had demanded to know why warning signs were missed, reports Reuters.

Barr was to appear again before the House Financial Services Committee later on Wednesday.

At 6.55pm, the Dow Jones industrial average was 0.71% firmer at 32,623.3 points, while the S&P 500 was up 1.07%. In Europe, London’s FTSE 100 also added 1.07%. France’s CAC 40 rose 1.39% and Germany’s DAX jumped 1.23%.

On the JSE, retail company Steinhoff plunged as much 25%, its biggest one-day drop since December, after the group said it will ask creditors to approve a restructuring plan that leaves shareholders with nothing. By close of trade, the loss was pared to 24c, leaving it 11% lower. The company’s debt, which includes €10.2bn due at the end of June, exceeds the value of its assets by €3.5bn, essentially rendering it bankrupt.

Steinhoff announced late on Tuesday it had a drawn up new restructuring plan in a last-ditch attempt to avoid creditors taking over in June. The plan is similar to that announced in December, except that shareholders will walk away with nothing.

The rand spent most of the session little changed, but by 6.07pm, it had strengthened 0.25% to R18.0905/$, 0.33% to R19.6026/€ and 0.27% to R22.2927/£. The euro was less than 0.1% weaker at $1.0832.

Gold eased 0.45% to $1,964.38/oz, but platinum gained 0.94% to $972.04/oz. Brent crude was 0.92% weaker at $77.63 a barrel.