BIG SWINGS IN GLOBAL MARKETS

Global stock markets saw wild swings after Tuesday’s massive gains for the Democrats in the US.

Markets were up on Wednesday, but tech stocks plunged a day later as investors panicked over fears of an AI slowdown.

Our own JSE tracked the initial blue-wave euphoria – the Top 40 was up over 5% at one stage, but as prices settled, it slipped back to close up 4%, with the All Share up 3.7%.

Key driver – the rebound in the gold price and a weaker dollar, which pushed mining shares well up.

In London, the FTSE was muted – down 0.4%.

MASSIVE TECH STOCKS SELL-OFF IN U.S.

Then came the US. Investors fear newly elected politicians will seek to slow data centre development and curtail the AI boom. Wall Street shed $3.2 trillion as the tech-heavy Nasdaq plunged, closing over 5.5% adrift - its biggest one-day drop since 2020.

The S&P 500 fell 4.4% and the Dow 3.4%.

Tokyo has followed suit, down nearly 6% this morning. South Korea down 8.8% - Taiwan down 6.2%. Hong Kong is down 0.6%, and Sydney is down 1%.

For what it’s worth, markets look like they may settle later today – the Nasdaq futures index is up just under 1%.

The US dollar has firmed back to $1.12 against the euro; the rand has given up most of its recent gains, back to R16.52 against the dollar, R18.51 against the euro, and R22.20 against sterling.

Gold is also slightly easier - $4,047 – platinum $1,516 – Bitcoin – down over 6% to just over $75,750.

Even Brent Crude oil has firmed – now back to just under $100 per barrel.

TREASURY LOWERS S.A. DEBT RATIO

Away from the thrill of the elections, more things change, but more stay the same.

As we suggested might happen in a report a couple of days ago, National Treasury has taken the new, revised GDP figures and adjusted the country’s debt levels downwards.

Debt-to-GDP is now 74.6% in the financial year to end March this year. That’s down from the 78.4% estimated in the Budget update.

Treasury is now forecasting that debt-to-GDP will fall below 70% in 2032.33, a year earlier than the Budget update forecast.

That’s the change part, and it’s welcome, too, because it moves us closer to a credit rating upgrade.

However, things stay the same because, as senior economist Jee-A van der Linde of Oxford Economics points out, the change in numbers does nothing to improve the real economic growth needed to create additional employment.

As we also said in that report last week, you can’t eat GDP.