Rand rebounds after Fed decision

The JSE ended lower on Thursday, but off session lows. The rand rebounded as investors came to terms with the postponement of US interest rate cuts.

As widely expected the Federal Reserve kept interest rates steady after its meeting on Wednesday. Chair Jerome Powell highlighted the need for inflation to come down “more sustainably towards” the central bank’s 2% goal.

The Federal Open Market Committee’s (FOMC’s) tone was cautious, not dovish, though markedly less hawkish than before, said Investec chief economist Annabel Bishop. “The markets having centred on May as the first rate cut, will digest the FOMC statement in the remainder of this week,” she said. “The market expectations for the first FOMC cut are unlikely to change materially; that is, be brought forward to the next meeting (on March 20), though US data releases in the interim will remain key. It remains likely the FOMC will not cut its interest rates before May at the earliest, potentially rather at its June meeting. For SA the Reserve Bank is unlikely to cut before July,” said Bishop.

The JSE all share lost 0.12% to 74,469 points, recovering from a drop of more than 1% earlier. The top 40 was down 0.15%. Precious metals gained 1.58% and industrials 0.45%. Industrial metals lost 1.51%, food producers 1.31%, banks 1.28%, financials 0.87%, retailers 0.68% and resources 0.28%.

At 6.18pm, the Dow Jones industrial average was unchanged at 38,148.81 points. The S&P 500 was up 0.24%. Markets in Europe closed lower.

Data on Thursday shows eurozone headline inflation eased slightly in January, while core figures were down less than expected. Annual headline price rises came in at 2.8%, in line with the median forecast of economists surveyed by Reuters. Inflation stood at 2.9% in December, up from 2.4% in November, due largely to the winding down of energy price support measures, according to Reuters.

The share price of Africa’s largest pay TV operator, MultiChoice, jumped almost 27% to R94.95, the biggest oneday gain on record, after confirming it had received a buyout offer from French entertainment giant Canal+.

At 6pm, the rand had strengthened 0.47% to R18.5969/$, 0.4% to R20.1348/€, and 0.71% to R23.5809/£. The euro was less than 0.1 firmer at $1.0821.

Gold gained 0.53% to $2,049.41/oz, while platinum lost 0.44% to $917.48/oz. Brent crude was 0.86% firmer at $81.33 a barrel.