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Pravin Gordhan

Cape Town — Trading day 3 — South African markets remained fixated on Finance Minister Pravin Gordhan’s debacle and the possible ramifications of replacing him and his deputy Mcebisi Jonas.

The rand spent most of the day trading near R13.13 — 83 cents softer than the 20-month high of R12.30 to the green back reached on Monday morning.

The market has been on edge, awaiting any news of a possible cabinet reshuffle by President Jacob Zuma.

At approximately 14:10, there was a shock price movement in the rand — climbing 1.3 percent up.  The rand’s sudden injection of strength swung the climbing JSE southwards, sending mining stocks and rand hedges lower off their intra-day highs. The ALSI Top 40 ended the day 0.42 percent up, capped by the surprise rand strength.

At the close of the market, the Resources Index was up 1.02 percent and the Industrial Index was 0.60 percent up. The Financial Index traded 0.99 percent lower.

At the close of JSE trading the ZAR was sitting back up at R12.97/$. As prices continue to move on rumour, counter-rumour and speculation — the rand will continue to be erratic on international currency markets. Those expecting a definite reshuffle have sought solace in offshore markets and rand hedge stocks — hoping to weather the potential storm.

In local markets Capitec [JSE:CPI] announced it is to acquire a 40 percent stake in Crèmefinance, an online only lending group with a footprint in over 30 countries. The €2m purchase marks the bank’s first venture into international markets, giving scope for Capitec to expand globally in future.

Presently, Capitec seeks to expand its footprint in South Africa and will be rolling out a series of “microstores”, as well as simplifying the pricing of its products. It currently does not have any aspirations to move into the asset backed financing space aside from its partnership with SA Homeloans, but will be continuing to trial a credit card pilot project.

Gold Bullion remained flat, trading at $1252.52/0z at 17:30 — as discussions around Brexit talks were not enough to significantly offset the firmer US dollar. The dollar gains, as well as US equity and bond markets capped the gains of the “safe-haven” asset, suppressing demand.

There are still many uncertainties regarding the European split, and this has been exacerbated by the official start of Brexit negotiations and the build up to the French elections. Brent Crude climbed 1.58 percent up at $52.01/bbl in late trade, slightly firmer as markets accommodate slightly lower oil inventories and expectations of an Opec-led production cut toward the second half of the year.

At the time of writing, the Dow Jones futures market was slightly negative breaking yesterday’s upward trajectory. The index has been pulled lower by energy and financial stocks. The broader S&P 500 was also down slightly by 0.04 percent at mid-day trading.

Scottish lawmakers have voted 69-59 to seek a new referendum on independence within the next two years, presenting the British government with an unwelcome distraction as it pushes the EU exit button. — Fin24