The JSE closed marginally firmer on Tuesday after swinging between small losses and gains in the session, while the rand weakened as investors digested news about SA’s power crisis and economy.
The government and Eskom are facing legal challenges on multiple fronts over the ongoing outages that continue to worsen, disrupting the country’s economic activity.
Investors now await the outcome of the meetings between President Cyril Ramaphosa and the national energy crisis committee, the Eskom board and management team, labour organisations and business leaders. Ramaphosa cancelled his trip to the World Economic Forum gathering in Davos, Switzerland, “due to the ongoing energy crisis”.
According to Bloomberg, economists now see a 45% chance of a recession due to the cumulative effect of load-shedding and higher interest rates on the local economy.
“Persistent heightened load-shedding continues to weigh heavily ... [and] remains a key downside risk to the country’s growth potential,” said Investec economist Lara Hodes.
The JSE all share gained 0.27% to 79,385 points and the top 40 0.32%. Industrial metals gained 1.38%, industrials 0.94% and resources 0.16%. Precious metals lost 1.56%, banks 1.39% and financials 1.15%.
At 6.25pm, the Dow Jones industrial average was 0.92% weaker at 33,965 points after disappointing corporate earnings from Goldman Sachs. In Europe, the UK’s FTSE 100 lost 0.18%, France’s CAC 40 gained 0.37% and Germany’s DAX was 0.29% higher.
Globally, investors digested another batch of corporate earnings and economic data out of China. The Chinese economy grew 3% in 2022, while its fourth-quarter print came in at 2.9% year on year, which was significantly higher than the Bloomberg consensus forecast of 1.6%.
“This has underpinned hopes that we can expect a rebound from the world’s second-largest economy in 2023, given that Beijing has loosened its stance on lockdowns and remains steadfast in its commitment to underpin the economy,” said analysts at RMB.
“The prospect of a soft landing in the US and a shallower economic hit in China from the Covid-19 transition, not to mention a strong rebound, is positive for the markets,” FXTM senior research analyst Lukman Otunuga.
“Now it’s over to Davos and earnings season to get a look at how policymakers and business leaders perceive the latest developments, and whether companies are planning for tough conditions ahead,” said Otunuga.
At 6.42pm, the rand had weakened 0.25% to R17.0975/$ and 0.98% to R20.9615/£, while it strengthened 0.11% to R18.44/£. The euro was 0.32% weaker at $1.0787.
Gold dipped 0.11% to $1,912.39/oz and platinum 1.72% to $1,043.70/oz. Brent crude was 1.86% firmer at $85.65 a barrel.
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