A good Wednesday for financial markets

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Windhoek

It was a good Wednesday this week for stock traders as the market closed on the day with stocks on track to
end their most bruising quarter in four years with gains led by shares that have been most exposed to global economic slowdown and commodity sector rout that have rattled investors in recent days.

It was a similar pattern in foreign exchange where emerging market currencies, having fallen to historic lows,
rose against the dollar. Emerging market currencies fared better against the dollar. South Africa’s rand rose 1
percent, although it was still on track for a quarterly loss of 14 percent, its 14th in succession. Zambia’s kwacha, which had hit a record low on the back of concerns about one of Africa’s largest mining and trading firms Glencore and a falling copper price, rebounded 2 percent.

Shares in Glencore, which plummeted on Monday on the back of sliding commodity prices, rose 6 percent after it
sought to reassure investors over its debt situation. They had  risen 17 percent on Tuesday.

In early trade the FTSEuroFirst 300 index of leading European shares were up 1.9 percent at 1361 points,
with Germany’s DAX and France’s CAC 40 both up 2.3 percent.

Britain’s FTSE 100 was up 2 percent, and U.S. stock futures pointed to a rise of around 1 percent at the open on Wall
Street. Overall, investors will be glad to see the back of the third quarter. “The market is a bit oversold but there are
still worries over the growth outlook and central bank policy,” said Antonin Jullier, head of equity trading strategy
at Citi in London. “The kind of volatility we are seeing is not the good kind. Risk appetite is being hurt.”

The FTSEuroFirst is on track to post a 10 percent loss in the third quarter, the biggest since a 17 percent decline exactly four years ago in the white heat of the eurozone crisis. Earlier in Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.8 percent, after plumbing its lowest since June 2012 on Tuesday on fears that China’s economic slowdown would curb that country’s huge appetite for commodities and resources.

The index was on track for a 17.5 percent loss in the quarter, also its worst performance in four years. Japan’s Nikkei brushed aside an unexpected drop in the country’s industrial output to close up 2.7 percent, paring losses for the quarter to 14.1 percent, its deepest since 2010. Eurozone inflation and U.S. private sector employment data,
as well as a speech from Federal Reserve Chair Janet Yellen was expected to give markets some direction later on Wednesday. Annual euro zone inflation is expected to have dipped to zero in September, but surprisingly
weak Spanish and German data on Tuesday suggest the regional number could turn negative, adding to pressure on
the European Central Bank to inject more policy stimulus.

“We expect QE (quantitative easing) to be increased this year, but December remains more likely,” RBS rates strategists wrote in a client note on Wednesday. “To accelerate this timeline to October we would need to see
substantial further downside in equities, another meaningful slip in the Chinese yuan, and/ or further negative hard data on China.”The euro was on the defensive on Wednesday, down 0.2 percent at $1.1225, and twoyear
German bond yields were unchanged at -0.25 percent.

Demand for the safe-haven yen eased as stocks steadied. The dollar fetched 120 yen,  having turned around from a
low of 119.24. Yields on U.S. Treasury bonds rose. The 10-year yield was up 3 basis points to 2.08 percent as comparable German yields were little changed.

Benchmark three-month copper on the London Metal Exchange CMCU3 rose 1.7 percent to US$5 057 a tonne,
compared with a six-year low of US$4 855 hit in August. Prices of other industrial metals, including aluminium
and zinc, also halted recent slides. Crude oil futures were mixed. U.S. crude fell 0.3 percent to US$45.11 a barrel, while Brent rose 0.2 percent to US$48.30.
– Compiled from Reuters & AFP

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