The rand further declined on Wednesday, reaching its lowest point in over a month, following the ANC's suggestion of a "government of national unity” and a “supply and confidence model.” According to Business Day, the ANC's National Executive Committee (NEC) is expected to examine a motion rejecting the idea of a formal coalition with either the DA or the EFF. Instead, the committee recommends exploring various power-sharing options, including offering positions in parliament and the national executive to smaller opposition parties with no single party or pre-established coalition of parties having an absolute majority of seats, while allowing a minority party to lead parliament with the ANC controlling the executive. The constitution requires the National Assembly to assemble and elect a president within two weeks of the election results announcement. Despite losing its majority, the ANC nevertheless received the most votes, allowing it to dominate negotiations with other parties. At 18h30, the rand had weakened 1.40% to R18.95/$, having touched an intraday worst of R18.98/$. It had weakened 1.10% to R20.59/€ and 1.03% to R23.16/£. The FTSE/JSE All Share Index was little changed at 76 829 points.
US stocks continued their upward trend on Wednesday, buoyed by positive economic indicators, a rise in US Treasury yields, and optimism surrounding the tech sector. The S&P 500 surged by 1% and the Nasdaq 100 advanced by 1.50%, marking new record highs, while the Dow climbed by over 100 points. Data from the ISM revealed that US service sector activity expanded at its fastest pace in nine months, with price increases moderating more than anticipated, alleviating concerns of a hawkish Federal Reserve (Fed) outlook. Meanwhile, the ADP report indicated that private sector job growth fell short of expectations, consistent with other data suggesting a slight slowdown in the otherwise robust labour market.
European stocks surged on Wednesday to close higher, with markets anticipating improved credit conditions in the Eurozone ahead of the European Central Bank’s (ECB) decision scheduled for later today. The Eurozone’s STOXX 50 rose by 1.60% to reach 5 033, coming within less than 70 points of the 23-year high reached last month, while the STOXX 600 increased by 0.80% to end the session at 521.
Asian equity markets fell on Wednesday, despite better-than-expected services activity data. A recent private survey indicated that China's services sector expanded in May 2024, rising to 54 from 52.5 in the previous month, surpassing market expectations of 52.6. However, the official non-manufacturing PMI disappointed, registering at 51.1, below market forecasts of 51.5 and a decrease from the previous 51.2. With a series of mixed Chinese data in recent weeks, many analysts suggest that the economic recovery remains uneven, adding to uncertainties about the future outlook. Investors are now anticipating Friday's release of the China trade data.
In commodities, bullion gained 1.21% to $2 356.89/oz and platinum 0.70% to $1 004.30/oz. Brent crude rose by 0.53% to trade at $77.93 a barrel in a likely technical rebound after oil prices tumbled to four-month lows. Trading Economics added that “Energy markets also tracked other risk assets higher as Treasury yields declined further after soft US jobs data sparked hopes that the Fed could cut interest rates twice this year. The likelihood that the Fed would lower borrowing costs in September is now at 69%, a move that could stimulate economic activity and boost oil demand.” Meanwhile, according to EIA data, US crude inventories rose by 1.233 million barrels last week, reversing the previous week's decline of 4.156 million barrels. This increase goes against market expectations of a draw of 2.3 million barrels.
