JSE ekes out gains in cautious trade

The JSE closed slightly stronger on Monday, with global markets mixed as investors look ahead to meetings of the US Federal Reserve, the European Central Bank and the Bank of England this week.

The Federal open market committee will conclude its two-day meeting on Wednesday, and market participants expect policymakers to keep interest rates within the 5.25%-5.5% range, where they have been since July. Investors are also looking for signals for when central bankers will begin to cut interest rates.

According to the CME Group’s FedWatch tool, markets are pricing in a 45% likelihood that the Fed will lower rates by 25 basis points in March.

US consumer inflation data for November is due on Tuesday. Signs of cooling inflation have cemented expectations that the Fed will put a pause on rate hikes, while investors are betting that central bank policymakers will cut rates early in 2024.

“Caution prevailed for most of the session as investors approach a week filled with central bank meetings and US inflation data that could shape expectations for rate cuts in the coming year,” RMB analysts said.

“The positive payrolls report last Friday has led to a re-evaluation of expectations for a March rate cut by the Fed, but the possibility of a cut in May remains at 76%.”

The tone of the Fed’s meeting could generate some volatility given how dovishly priced the market remains, RMB analysts said.

The JSE all share index gained 0.14% to 73,892,30 points, while the top 40 was up 0.19%.

At 6.40pm, the Dow Jones industrial average was 0.34% firmer, while European markets were mixed.

The rand extended the previous session’s losses, reaching an intraday worst of R19.1390 against the dollar.

“The stronger US non-farm payrolls figure torpedoed any thoughts of a recovery for the rand,” RMB analysts said. “The local unit tested the R19 level last week as the dollar continued to recover. A close above R19/$ will embolden rand bears to add to USD/ZAR long positions, with a test of the prior high at R19.26 becoming the target,” they said.

At 5.35pm, the rand had weakened 0.75% to R19.0981/$, 0.61% to R20.5273/€ and 1.03% to R23.9987/£. The euro was 0.12% weaker at $1.0748. Gold lost 1.09% to $1,982.71/oz. Platinum was little changed at $916.6/oz. Brent crude was 0.22% weaker at $75.67 a barrel.