JSE still in the red, investors wait

The JSE started the second trading week of 2024 in the red, albeit off its worst levels of the day, while global markets were mixed and the rand was little changed from pre-weekend levels.

In the absence of any major company news to give the local bourse direction, investors concentrated on global events — notably the direction of interest rates and the ongoing geopolitical tension in the Middle East.

Stocks worldwide have come under pressure this year after a stronger-than-expected showing late in 2023 as investors, previously hopeful that rate cuts in the US are just around the corner, have had a rethink.

Friday’s higher-than-expected US payroll number saw traders scale back bets of an early rate cut by the Federal Reserve.

“Markets will now focus on Thursday’s US consumer inflation number for clues to the timing of the Fed’s rate cuts,” said Andre Cilliers, currency strategist at TreasuryOne.

The JSE all share index closed down 0.52% at 74,103,23 points, after being more than 1% lower at one stage, with the top 40 index off 0.59%.

With gold falling to a three-week low earlier on Monday under pressure from dollar strength and elevated treasury yields, the JSE’s resources index gave up 2.35% and the precious metals and mining index 1.89%.

Spot gold was down more than 1% at one stage on Monday, but recovered some losses and at 6.10pm was 0.44% weaker at $2,036.44/oz, while platinum was 0.35% softer at $959.80.

After a volatile day on Friday — when it traded in a 37c range — the rand was more stable on Monday despite a firmer dollar.

An improvement in SA’s manufacturing activity in December after seven consecutive months of contraction may have lent the rand some support. The Absa purchasing managers’ index rose to 50.9 in December from 48.2 in November, suggesting manufacturers are more optimistic about business conditions over the longer term.

At 6.10pm the rand had firmed 0.53% to R18.5763/$, 0.3% to R20.3902/€ and 0.09% to R23.6993/£.

With dollar strength and recent risk-off appetite, Cilliers said a break above the R18.85/$ level could see the rand have a run at R19/$ again in the short term.

At 5.45pm, the Dow Jones industrial average was down 0.12%. In Europe the FTSE 100 was off 0.1%, but France’s CAC 40 added 0.3% and Germany’s DAX 0.61%.