JSE eases as Fed decision looms

The JSE eased lower in line with its US and European counterparts on Wednesday after weaker-thanexpected monthly US jobs data, with investors firmly focused on the outcome Federal Open Market Committee’s (FOMC’s) first meeting of the year.

The latest ADP employment report shows private US employers added 107,000 jobs in January, less than the market estimate of 150,000 and below the 158,000 reported in December.

Still, the Federal Reserve is widely expected to keep interest rates steady at the conclusion of its FOMC meeting later on Wednesday. As has become the norm, observers will pay more attention to chair Jerome Powell’s comments than the announcement itself for clues on the timing and pace of rate cuts that it has signalled for later in the year.

The JSE all share closed less than 0.1% lower at 74,555 points — major indices were mixed — while the top 40 was down 0.1%.

“The ADP employment number was lower than markets expected, but I don’t think it changes anything for a couple of reasons. The most obvious is that it’s been a terrible indicator for the official payroll number so, barring an enormous miss, it should probably be ignored,” said Oanda senior market analyst Craig Erlam.

“I expect Powell and his colleagues may opt for language that leaves the door open to a rate cut in March without giving the impression that it’s likely. Flexibility is key at this stage and there’s a lot of important data over the next six weeks that could fully justify beginning the easing cycle and policymakers will be aware of that,” he said.

At 6.05pm, the Dow Jones industrial average was 0.11% firmer at 38,508.59 points though the broader S&P 500 was down 0.8%. Markets in Europe were weaker.

Locally, Transaction Capital rose just less than 11% to R8.21 — the most in more than two months — after announcing it aims to spin off its usedvehicle dealership.

The planned listing of WeBuyCars, which is 75%-owned by Transaction Capital, would separate a profitable asset from the holding company that houses the heavily indebted SA Taxi division that’s in serious risk of default.

The rand was steady, touching an intraday best at R18.6051/$ — the strongest level in two months. At 5.40pm, the rand had strengthened 1.2% to R18.6202/$, 1.02% to R20.1896/€ and 0.96% to R23.6735/£. The euro was 0.18% firmer at $1.086.