JSE in limbo as rand loses ground

The JSE was slightly weaker on Tuesday as conditions remained subdued and with little to offer any fresh direction. Global markets were also mainly in the red.

In the absence of local news, investors again chose to focus on the global picture and the uncertainty surrounding when the US Federal Reserve will start to cut rates.

“Markets are still split 50/50 on a March rate cut while looking for at least five and possibly six cuts this year,” said Andre Cilliers, currency strategist at TreasuryONE. “The Fed is forecasting only three cuts for 2024, so coming data will be crucial to the direction of the dollar.”

The JSE all share index closed down 0.37% at 73,826.15 points, while the top 40 declined 0.6%. The main contributors to the softer tone were the precious metals and mining index, which fell 1.5%, and resources, which declined 0.97%.

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.

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

The rand was trading in a narrow range. Cilliers said the local unit would need a sustained break of the R18.50/$ level to see possible further strength in the short term.

At 6.40pm the rand had weakened 0.35% to R18.6741/$, 0.2% to R20.4072/€ and was little changed at R23.7254/£.

Market direction this week could come from Thursday’s US consumer price inflation report for December, which is expected to show headline inflation rose 0.2% in the month and by 3.2% on an annual basis, according to Reuters. Data confirming that inflation continues to moderate could boost expectations for a March rate cut, though a reading above expectations could also reverse some of that pricing, Reuters reported.

Gold recovered from recent threeweek lows as investors took advantage of the previous session’s decline to buy the metal.

At 6.10pm the precious metal was 0.28% higher at $2,033.89/oz, while platinum was 0.66% softer at $939.30.

At 7.15pm, the Dow Jones industrial average was down 0.42%. In Europe the FTSE 100 ended the day 0.13% weaker, France’s CAC 40 was 0.32% lower and Germany’s DAX lost 0.17%.