The rand was firmer on Monday morning, while the JSE firmed slightly, with the focus on the US presidential election this week.
The latest NBC News poll showing a deadlocked race between Donald Trump and Kamala Harris, meaning the outcome of the election remains uncertain, which will weigh on markets. However, analysts say the real market mover may not be the presidential election itself, but rather which party gains control of Congress.
From a market perspective, Bloomberg has pointed to three possible scenarios. Divided control, where the House and Senate are split between Democrats and Republicans, which typically results in maintenance of the status quo and minimal policy changes. This scenario has historically led to stronger stock market performance, as a divided Congress puts limits on a president’s influence, reducing fiscal and political uncertainty.
In contrast, a Republican sweep may result in fresh spending plans and tax cuts, potentially boosting the economy, while a Democratic sweep could lead to tax increases and new spending initiatives that affect the market differently.
“A tight race between Trump and Harris adds to market unpredictability. Historically, Trump’s economic policies leant towards deregulation and tax cuts, potentially strengthening the dollar. However, his protectionist stance could also add trade tensions, impacting global markets,” said TreasuryOne currency strategist Andre Cilliers.
“A Trump win could buoy the dollar but may introduce volatility due to policy uncertainties. Harris’ win would likely keep the greenback under pressure, benefiting the rand in the short term,” Cilliers said.
At 10.35am, the JSE had gained 0.11% to 86,293.31 points, while top 40 was little changed. Industrial metals had added 0.65%, banks 0.45%, financials 0.31% and industrials 0.15%.
At the same time in Europe, the FTSE 100 was up 0.47%, while France’s CAC 40 was unchanged and Germany’s DAX had lost 0.14%.
Earlier in Asia, the Shanghai Composite added 1.17% and Japan’s Nikkei 0.23%, while Hong Kong’s Hang Seng lost 2.63%.
At 10.16am, the rand had strengthened 0.66% to R17.5252/$, 0.1% to R19.0967/€ and 0.14% to R22.7431/£. The euro was 0.59% firmer at $1.0898.
In the commodities markets, gold was little changed at $2,733.34/oz, while platinum gained 0.44% to $994.5/oz. Brent crude was 0.87% firmer at $74.63 a barrel.
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