JSE lifts as banking sentiment improves

The JSE tracked firmer global markets on Monday as the rand extended the previous day’s losses with investor focus still on global banking.

Global stock markets rebounded, making solid gains with a number of events helping sentiment towards banking shares. North Carolina-based First Citizens Bancshares bought all loans and deposits of SVB, and gave the Federal Deposit Insurance Corp equity appreciation rights in its stock worth as much as $500m in return.

The bank’s move helped create an uneasy calm on Monday in markets roiled by worries of a credit crunch and systemic bank stress, reports Reuters. The deal gave markets some respite as it was the first weekend in several that did not bring news of banking collapses, rescue deals or emergency help from authorities to shore up confidence. Bloomberg reports that US authorities are considering expanding an emergency lending programme for banks to give themselves time to shore up liquidity.

First Republic, which had a similar business model to SVB, has been a point of concern. Eleven larger banks deposited $30bn into First Republic in a show of confidence in the smaller firm, according to Bloomberg.

“It has been a relatively calm start to the week, with investors seemingly relieved that the weekend brought no fresh turmoil in the banking sector,” said Oanda senior market analyst Crag Erlam.

“The authorities were once again hard at work at the weekend trying to clean up the mess of the last few weeks. The important thing is that the various institutions in the US and Europe continue to display the ability to rapidly and decisively deal with the fallout from the recent turbulence and contain it before it worsens. That includes regaining the confidence of the markets which has been shaken,” said Erlam.

The JSE all share index edged up 0.79% to 75,283 points and the top 40 added 0.87%. Banks rose 1.64%, financials 1.6%, industrial metals 1.01%, resources 0.98% and food producers 0.95%.

At 6.10pm, the Dow Jones industrial average was 0.68% firmer, with markets also higher in Europe.

The rand extended the previous session’s losses, weakening to the intraday worst of R18.3488/$ as “uncertainty continues, with the dollar trading stronger and the yen soaring to seven-week highs”, said Citadel Global director Bianca Botes. At 6.23pm, the rand had weakened 0.84% to R18.3089/$, 1.2% to R19.7593/€ and 1.42% to R22.4916/£. The euro was 0.32% firmer at $1.0793.