JSE ends quarter higher as rand stays up

The JSE finished the week and the first quarter firmer, in line with its global peers as markets dealt with more interest rate tightening and a minifinancial crisis inflicted by the collapse of Silicon Valley Bank (SVB) in the US.

The all share finished the quarter 4.18% higher, and it was up 1.88% for the week — helped by gains in industrial metals, food producers, resources and financials — which were up 3.7%, 3.5%, 3.02% and 2.12%, respectively.

For the month, however, the local bourse was down 2.1% — according to Infront — as markets battled contagion fears after the failure of two US banks, a forced-takeover of Credit Suisse in Europe and a flight of deposits from smaller institutions to larger banks.

Sentiment improved after authorities in the US and Europe stepped in to halt further turmoil in the banking sector — such as US authorities considering expansion of an emergency lending programme for banks, to give them more time to shore up liquidity.

Investors also had to deal with more interest rate hikes from world’s influential banks, with the Reserve Bank following suit. The US Federal Reserve raised rates 25 basis points (bps), while saying it was unsure how much tighter financial conditions will become as a result of current stress.

The local bourse pared losses on Friday, while its global peers were firmer as “an action-packed end to the week, month and quarter sees equity markets attempt to close firmer going into the weekend,” said Oanda senior market analyst Craig Erlam.

“Markets attempting to end on a positive note is a big deal considering how disastrous the rest of the month was,” Erlam added. “Confidence is easily shattered and difficult to restore and a positive end to the week would send a strong signal investors are feeling reassured by the lack of turmoil ....

“Market participants were caught off guard by the decision to hike by 50bps vs the consensus of 25bps, with local equities under pressure while there is a wave of positivity sweeping across global equities,” said RMB market macroeconomist Siobhan Redford. The repo rate is now on 7.75%, the highest level since 2009.

The JSE all share closed 0.79% weaker at 76,100 points, while the top 40 was down 0.83%. At 6.28pm, the Dow Jones industrial average was 0.78% firmer at 33,153 points, and European markets were also firmer.

The local currency remained at its best level in seven weeks after gaining for four sessions in a row. At 6.20pm, the rand had strengthened 0.35% to R17.7505/$, 0.67% to R19.2791/€ and 0.62% to R21.9288/£. The euro was 0.4% weaker at $1.0862.