JSE still weaker, rand hits five-week low

The JSE extended its losses to a third day and its lowest level in two months, while the rand fell to its worst level in five weeks as investors reconsider the timing of the first US interest rate cuts. The dollar soared.

Most global bourses were also under pressure as central banks pushed back against interest-rate cut bets, while signs of a patchy economic recovery in China drove share prices there to their lowest levels in almost five years, reports Reuters.

Official data shows China’s economy grew 5.2% in the fourth quarter of 2023, slightly below analysts’ expectations.

The JSE all share index closed 1.8% lower at 71,693.09 points, while the top 40 shed 1.88%.

All major sectors were in the red, with the precious metals & mining index losing 3.49%, resources 2.87%, banks 1.94%, financials 1.69% and industrials 1.41%. Among the day’s biggest losers were Sibanye, which shed 6.13% to R21.28, AngloGold, off 4.46% at R305.11, and Harmony, which retreated 4.07% to R104.57.

At 6.18pm, the Dow Jones industrial average was less than 0.1% weaker at 37,332.27 points.

In Europe, while London’s FTSE 100 was down 1.59% shortly before the close France’s CAC 40 eased 1.11% and Germany’s DAX retreated 0.9%.

The dollar rose to a one-month high a day after Federal Reserve governor Christopher Waller said though inflation was approaching the US central bank’s 2% goal, the Fed shouldn’t rush to cut rates until lower inflation could clearly be sustained.

Compounding the bearish sentiment, data showed a higher-thanexpected rise in US retail sales in December, tempering expectations of the Fed delivering early interest-rate cuts this year. Traders’ expectations of a 25 basis-point cut in March dipped to 55% from about 60% before the data was released, reports the CME FedWatch Tool. Mounting fear of escalation of Middle East conflict supports the dollar, said Andre Cilliers, currency strategist at TreasuryONE.

“Waller stated that rate cuts were likely to be later than market estimates and at a slower pace.” He reiterated that coming data would guide the Fed, Cilliers said. “Risk appetite has receded sharply, and there has been a large move back to the dollar,” he said.

At 6pm the rand had weakened 0.84% to R19.132/$, 0.41% to R20.7579/€ and 0.96% to R24.2179/£. “The stronger dollar, concerns over the Chinese economic recovery and Middle East tensions have seen commodity prices fall,” said Cilliers.

At 5.50pm, gold was 0.88% softer at $2,010.23/oz and platinum was down 1.94% at $880.70/oz. Brent crude was 0.89% lower at $77.19 a barrel. mackenziej@arena.africa