The JSE and rand were relatively steady on Friday morning, with investors still eyeing risk events, in the form of the future of President Cyril Ramaphosa and a key US jobs report.

Local markets were pummelled on Thursday as investors digested a possible exit for Ramaphosa, generating uncertainty about the future of SA politics, and the state of the budget deficit.

In morning trade, the local currency marginally weaker at R17.55 to the dollar, but had firmed 0.27% to R21.51 to the pound. The rand has still weakened about 2.47% against the dollar and 4.1% against the pound over the past five days, with the greenback under some pressure this week after US Federal Reserve chair Jerome Powell signalled the bank will be dialling back the pace of monetary policy tightening.

The JSE had slipped about 0.16% and was just below 75 000 points, with Absa recovering 2.4% after an almost double-digit fall on Thursday, while FirstRand was up 2.4%, having lost more than 9% in the prior session. 

SA's ten-year bond was stronger, trading at 10.845% - about a 0.87% improvement - having had their worst day since 2015 on Thursday.

Asked about whether the bond selloff had caused a liquidity crunch that could mean central bank intervention, Coronation Fund Managers head of fixed income Nishan Maharaj said a Reserve Bank intervention, at this point, is unlikely as the selloff was in reaction to a possible change to SA's risk premium due to ongoing political events, rather than a liquidity event.

"The SARB previously stated that they will intervene in the bond market if the liquidity in the system deteriorates such that it poses a systemic risk to SA’s financial system," said Maharaj. "At this point, bank liquidity seems fine and other parts of the market are functioning normally, so it seems unlikely."

It was arguably one of the most intense trading sessions for SA government bonds yesterday as the market started to factor in the distinct possibility of life without Ramaphosa, Nedbank Corporate and Investment Banking analysts said in a note. The local financial markets are all awaiting insights from the president on the way forward, the analysts said. Globally, the focus will be data releases.

US nonfarm payrolls numbers for November are due later, with the market expecting US employers to have added around 200 000 jobs in November. The report is due 3.30pm SA time.

"If you asked me last week, or at the beginning of this week, how the market would react to a strong NFP data, I would say, probably poorly – because we know that the Fed wants the labour conditions to deteriorate to fight inflation, and strong jobs data would only revive the hawkish Fed expectations and send equities lower," Swissquote senior analyst Ipek Ozkardeskaya said in a note.

"But after having seen the overly optimistic market reaction to Jerome Powell’s speech on Wednesday - which gave away no new information but which triggered a weird euphoria across risk assets - I think that investors are dying to price in the goldilocks scenario, which is the sweet combination of slowing inflation, but a mild economic slowdown, which means mild deterioration in the US jobs data."

This means a fairly strong print should boost risk appetite, while a soft report should increase recession odds and put pressure on equities, she said.

"Then, there is a slim possibility that we will see a very strong figure, at 300 000 or above. In that case, we shall see the Fed hawks take the upper hand again, and send equity valuations lower before the weekly closing bell. "