JSE closes weaker with focus on Sona

The JSE closed weaker on Wednesday, while global markets were mixed as investors continued to reprice ratecut expectations by the Federal Reserve (Fed).

Early expectations for an interestrate cut had boosted market sentiment coming into 2024. But doubts have crept in after strong economic data and Fed chair Jerome Powell signalling last week that investors may have to wait longer than expected for a central bank pivot.

Powell’s comments in an interview with CBS led traders to believe that there may be fewer cuts in 2024 than the market was pricing in, putting pressure on the markets.

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

Other Fed speakers have backed up Powell’s cautionary tone. Cleveland Fed president Loretta Mester said on Monday a strong economy is enabling policymakers to patiently decide when, and how aggressively, they intend to cut rates.

“Markets have had a rather shaky start to the week as cautious tones by the Fed officials that the central bank is unlikely to cut interest rates as soon as traders had hoped weighed on sentiment,” said FXTM senior research analyst Lukman Otunuga. “The US economy remains resilient even with the high-interest rates. Investors are coming to grips that this will push forecasts for the first monetary policy easing to later in the year, probably the second half of the year.”

The JSE all share had lost 0.33% to 74,313 points and the top 40 0.42%. Industrials gained 0.43% and food producers 0.37%. Industrial metals fell 2.28%, resources 1.52%, banks 1.05%, financials 0.59%, precious metals 0.41% and retailers 0.2%.

At 6pm, the Dow Jones industrial average was 0.39% firmer at 38,673 points and the S&P 500 had gained 0.61%. In Europe, the FTSE 100 lost 0.68%, France’s CAC 40 0.33% and Germany’s DAX 0.69%. Locally, all eyes will be on the state

of the nation address (Sona) by President Cyril Ramaphosa on Thursday. This will be his last Sona of his first term of office. Among other things, markets are hoping that Ramaphosa will announce the date for the upcoming general election.

At 6.21pm, the rand had weakened 0.46% to R18.8962/$ having touched an intraday worst of R18.9394/$. It had weakened 0.43% to R20.3301/€ and 0.75% to R23.8532/£. The euro was little changed at $1.0759.

Gold gained 0.19% to $2,039.57/oz, while platinum fell 2.38% to $882.33/oz. Brent crude was 0.38% firmer at $79.02 a barrel.