JSE regains strength

2008-09-30 00:00

Facing a challenging market day following a black Monday on Wall Street brought about by the rejection of a possible bail-out plan by the U.S. House of Representatives, local investors saw the JSE move 2,3% higher in late afternoon trade yesterday.

The JSE opened lower yesterday, but recovered later in the day, largely on the back of a rally by financials and industrials.

The rand was trading half a percent weaker to the U.S. dollar while the platinum price fell by more than seven percent by late yesterday afternoon.

Markets went into panic after the House rejected a fragile compromise plan to spend up to $700 billion to revive a financial sector weakened by the U.S. housing meltdown. This led to the JSE suffering a bloodbath on Monday as the JSE all-share index closed 5,76% lower.

“What will happen now? Basically any depositor in a U.S. bank can no longer be sure that his deposits are entirely safe. Thus, in the interests of prudence, they will start to withdraw ‘just in case’. Lots of people doing that together cause a bank crisis,” said Warwick Lucas, equities analyst at Imara SP Reid. Lucas does not foresee a similar situation in SA.

He has confidence in the SA Reserve Bank, saying that the bank has proved itself in the past —- particularly by supporting BoE when it faced a crisis a couple of years ago. “They came to understand that fear is a terribly powerful force in relation to banks, because the number one requirement for a working banking system is confidence.”

As far as the SA economy is concerned, the demand for commodities remains intact in emerging economies. The outlook for manufactured goods is murkier, and may also depend on currency gyrations, said Lucas.

Join the conversation!

24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions.

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Inside News24

Traffic Alerts
There are new stories on the homepage. Click here to see them.


Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.

Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.


Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.

Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.