Yesterday`s terror attack against the US has left the world in shock and investors running for cover, leaving the world markets quivering wrecks.
The South African bourse escaped the worst of the reaction, closing shortly after the news of the attacks became known. However, the all share index did not remain unscathed, closing yesterday 199 points or 2.3% down at 8 459.
Although the US markets did not open yesterday and will remain closed today, JSE CEO Russell Loubser decided to open the JSE this morning.
"We cannot and will not allow such an act of terror to dictate to our financial markets. The JSE will therefore open on time this morning. Our heartfelt condolences go to the American nation and especially to our colleagues at the United States Exchanges," said Loubser this morning.
The attacks came at a time when the US economy is already facing the looming onset of recession, with technology sectors taking blow after blow and counters hitting new lows on a daily basis.
Matthys Strauss, financial economist at Absa, says the short-term affects on the technology markets will be significant.
"We are seeing financials and technology indices in a race for the bottom. At the moment [11.32am], the IT index is down 6.13%," says Strauss.
By noon today, Datatec had lost 125c (9.47%), trading at R11.95, and fellow bellwether stock Dimension Data lost 80c (6.64%), trading at 11.25.
Keeping the faith
However, Strauss says all is not lost for the bruised and battered tech industry.
"In the medium-term, when the market has effected a technical correction, we can see the US as well as Europe re-looking their security measures. This will mean a possible increase in spend in those technologies which will aid in beefing up security as well as those involved in peripheral software such as data recovery.
"The military spend will also bounce up, making technology companies involved in defence and related industries an obvious haven. The consumer end of the market will continue to feel the brunt of investors looking toward more stable equities or pulling out altogether and opting for bonds."
Strauss cautions that a military reprisal is the most likely course of action and says this could delay the recovery and continue market speculation.
The South African market in general can expect some more bad news and the rand is sure to lose more ground.
"Emerging markets are always hardest hit at a time like this. The rand is also very liquid and the foreign investors can get out of our markets very easily, making the currency one of the first to take a tumble."
Strauss believes fund managers will be waiting for the technical correction after the storm before making switches. He says this may well take the form of looking toward European markets rather than the US. He also foresees security and defence counters benefiting from increased interest from managers hunting for better future returns.
The JSE says it will join markets throughout Europe in halting trade for two minutes today at 8.45am New York time (2.45pm local time) in an expression of sympathy with the US.
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