JSE, rand firmer as markets try a rebound

The JSE closed firmer on Tuesday as markets attempted a rebound after Monday’s sell-off.

After another recent batch of strong data pointing to the US economy remaining resilient, investors are taking in that the US Federal Reserve (Fed) might not cut interest rates as much as markets had hoped.

Fed chair Jerome Powell said in an interview with CBS at the weekend that the Fed would be cautious about cutting rates and that there would probably be fewer cuts than the market was pricing in.

Additionally, Powell said the central bank’s policymakers want to see more evidence that inflation is moving “sustainably down to 2%”.

Investors will be paying attention to remarks from more Fed officials from Tuesday, for more insights on the central bank’s monetary outlook.

Loretta Mester, Neel Kashkari, Susan Collins, and Patrick Harker — the presidents of the Cleveland, Minneapolis, Boston, and Philadelphia Fed banks, respectively — are all set to speak on Tuesday.

“Uncertainty about economic activity, particularly in the US, and the impact this will have on the timing of interest rate cuts continue to dominate market movements,” said RMB analysts.

“Fed officials scheduled to speak may not say anything that [the] chair did not touch on, but they might add a bit of colour to the picture.”

The JSE all share gained 0.71%, or 74,558 points — with major indices mostly firmer, and the top 40 up 0.86%.

Meanwhile, Chinese markets rallied after a government investment fund said it will step up stock purchases.

China’s Central Huijin Investment, a sovereign fund that owns the country’s state-run banks and other big government-controlled enterprises, promised to expand its purchases of stock index funds to help markets that have been sagging under heavy selling pressure from a property crisis and slowing economy.

“Chinese authorities stepped in to stem losses in the country’s stock market, after it hit a five-year low last week. This move forms part of the government’s intervention to assist the fragile Chinese economy, which somewhat assisted gains in the global markets,” said Citadel Global director Bianca Botes.

The rand held steady on the day, touching an intraday best of R18.8248/$, after closing above R19/$ in the previous session.

At 6.21pm, it had strengthened 0.97% to R18.8876/$, 1% to R20.2777/€ and 0.49% to R23.7589/£. The euro was little changed at $1.0744.