The rand firmed to below R18 to the US dollar after Finance Minister Enoch Godongwana outlined how the government’s fiscal and debt outlook improved since the national budget statement in February 2022. The local currency was trading at R17.92/USD at 20h20. During his Medium-Term Budget Policy Statement (MTBPS) yesterday, Godongwana “flagged smaller deficits in the next three years and said debt (could stabilise) at a lower level thanks to higher-than-expected revenues. (The minister) plans to use some of the extra revenue to reduce government debt and bail out three state companies. He also announced the extension by a year of the social relief distress grant that was paid to low-income households during the Covid-19 pandemic. At the same time, the National Treasury remained firm on limiting increases for public-sector workers,” Trading Economics reported. The local bourse also closed firmer, up by 1.90%.
Wall Street was mixed at 18h00, with the tech-heavy Nasdaq trading in the red after worse-than-expected financial results from some tech giants. “Microsoft (NASDAQ:MSFT) dropped 6% after the tech giant posted its lowest sales growth in five years. Google-parent Alphabet (NASDAQ:GOOGL) tumbled 7% after reporting gloomy ad sales and offering sour guidance for the advertising business,” added Trading Economics. In the meantime, the S&P 500 and Dow Jones traded up on expectations that the US Federal Reserve could slow its aggressive monetary policy tightening, especially after the Bank of Canada unexpectedly raised its rate at a lower percentage than expected.
Strong earnings reports from Barclays (LON:BARC), Deutsche Bank (ETR:DBKGn), and Mercedes-Benz (ETR:MBGn) supported markets in Europe which also closed in the green on Wednesday.
Asian markets rebounded after a few days of heavy sell-offs “as Chinese authorities sought to boost confidence in the country’s stock and bond markets. Mainland stocks also tracked a global equity rally driven by a retreat in bond yields amid growing expectations that the US Federal Reserve will turn less aggressive in the coming months.”
A weaker US dollar pushed the price of Brent crude above $95 a barrel on Wednesday, while the price of gold rose towards the $1 700 an ounce mark “amid lingering concerns about a global recession and speculation that the Federal Reserve could slow the pace of rate increases later this year.”