Nervousness on markets easing after swearing in of MPs: Analyst

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Markets analyst Patrick Mathidi says the nervousness on the markets is easing as the swearing-in of Members of Parliament has gone through smoothly and there is better clarity on coalition deals. He says the rand continuing to strengthen against the US dollar on Friday’s market close is also a sign of confidence.

The JSE’s AllShare Index also ended 0. 8% higher driven by a rally in banks and retail stocks.

While the terms and conditions of the deals are still not clear, Mathidi says the next six weeks will be critical as parties will be meeting to iron out the finer details of the government of national unity.

However, he says the swearing-in of the lawmakers and election of the President provides a sense of continuity.

“This is the beginning, so we’ll have to see over the next few weeks.”

The local currency was trading at 18. 35 to the US dollar in late afternoon trade, 0.4% stronger than on Thursday.

The unit was trading at 18. 40 to the greenback when the JSE closed. Stocks in local banks and retailers surged more than 4% on the day.

Mathidi says this is a sign of confidence.

“The rand strengthening also is a sign of confidence that indeed…first step towards cutting rates.”

Mathidi says while the Reserve Bank decision will be data-dependent, the odds are high that there will be an interest rate cut before the end of the year.