JSE sinks before US rates decision

The JSE closed in negative territory on Tuesday as investors remained cautious before the US Federal Reserve decides on interest rates.

Brent crude prices fell late on Tuesday on reports that Saudi Arabia is close to regaining 70% of the 5.7-million barrels per day (bpd) of oil production lost in a weekend drone attack on state-owned Aramco ’ s oil facilities. This more than halved Saudi oil output capability. But Reuters reported on Tuesday that full production will be back in two or three weeks.

The price of Brent crude fell more than 5% in intraday trade on Tuesday, after leaping up 13.1% on Monday, as markets assessed the attack ’ s effects on global oil supply and inflation.

The US Fed interest-rate decision is expected after SA markets have closed on Wednesday. Senior market analyst at Oanda Craig Erlam said expectations of a cut of up to 50 basis points have diminished with markets now pricing in at least a 30% chance the Fed will keep rates unchanged. There were various explanations for the change in expectations, be it stronger data last week, improved risk appetite, trade war optimism and even higher inflation potential after the oil-price spike.

The Reserve Bank began its threeday monetary policy committee meeting on Tuesday. Eighteen economists polled by Bloomberg are expecting the Bank to say on Thursday that it is keeping the repo rate at 6.5%.

Statistics SA is to release the consumer price index (CPI) for August on Wednesday. The Bloomberg consensus is for a rise to 4.2% year on year from 4% in July.

Shortly after the JSE closed, the Dow was flat at 27,051.28 points. The FTSE 100 was down 0.26% and Germany ’ s DAX 30 0.12%, while France ’ s CAC 40 was up 0.15%. Earlier, the Shanghai Composite fell 1.74% and Hong Kong ’ s Hang Seng 1.23%, while Japan ’ s Nikkei 225 was flat. At 5.18pm, the rand was the second-worst-performing emerging market currency, weakening 0.55% to R14.7453/$, 1.02% to R16.301/€ and 1.05% to R18.4148/£. The euro had firmed 0.48% to $1.1056.

Gold was 0.32% up at $1,502.80/oz and platinum 0.42% at $940.81. Brent crude fell 3.89% to $65.2 a barrel. The JSE all share fell 1.66% to 56,895.20 points and the top 40 1.79%. Banks fell 3.41% and gold miners rose 3.11%.

Blue Label Telecoms lost 1.04% to R2.85. The JSE said it faces suspension for not posting financial results for the year to end-May. It is now expected to release the results on September 26.

Sappi fell 7.01% to R43.80 after it fell out of the JSE top 40 index on Monday, due to the listing of the Naspers subsidiary Prosus. Comair rose 2.9% to R3.55. The company said on Tuesday headline earnings per share rose 184% to 197.2c in the year to end-June.

Sasfin fell 6.38% to R32.28 despite saying headline earnings leapt 32.05% to R161.3m in the year to end-June.