JSE weaker before US Fed rates decision

The JSE started the week in the red, while global markets were mixed as investors await the US Federal Reserve’s monetary policy decision.

The Federal Open Market Committee will announce its first interestrate decision for the year on Wednesday, where it is widely expected to keep the rates steady.

According to Bloomberg, traders in the Fed funds futures market assigned an almost 97% probability that the Fed would not cut rates at this week’s meeting.

TreasuryOne currency strategist Andre Cilliers said markets are likely to be cautious ahead of the FOMC meeting. With traders expecting the Fed to hold rates steady, “attention will be on whether the message from the meeting is dovish enough for traders to price in a first rate cut as soon as March.”

“The direction of the volatility breakout is likely to be reinforced by this Wednesday’s FOMC monetary policy guidance,” said Kevin Wong, senior market analyst at Oanda.

The JSE all share index lost 0.95% to 74,370.53 points and the top 40 fell 1.04%. The precious metals and mining index fell 1.16%, banks 1.55%, financials 1.4%, food producers 1.42% and industrials 1.09%. But SA listed property added 1.06%.

At 5.35pm, the Dow Jones industrial average was little changed and the S&P 500 had lost 0.11%. In Europe, the FTSE 100 and France’s CAC 40 were little changed, while Germany’s DAX was down 0.21%.

Meanwhile, a host of mega-cap tech companies will post earnings reports this week, including Amazon, Apple, Alphabet, Meta and Microsoft.

Market participants are keeping a close watch on developments in China. Earlier, a Hong Kong court ordered the liquidation of Evergrande, raising questions about the state of the Chinese property sector.

The rand was little changed, but “continuing in its current ranges albeit with a slightly stronger tone”, said RMB head of forex execution Matete Thulare.

At 5.30pm, the rand was little changed at R18.8017/$ and R23.8254/£, while it had strengthened 0.36% to R20.3145/€. The euro was 0.42% weaker at $1.0804.

Gold gained 0.23% to $2,022.95/oz and platinum 1.11% to $924/oz. Brent crude was 1.9% weaker at $81.64 a barrel.