JSE and rand firm amid bets on rate cuts

Metals lifted the JSE higher on Wednesday, while the rand firmed as investors shrugged off US consumer inflation data that was hotter than expected.

Market participants continue assessing economic data in a bid to pinpoint when the Federal Reserve (Fed) will cut interest rates in 2024.

The CPI report comes before the producer price index (PPI), which measures wholesale inflation, is expected to be released on Thursday. Also due on Thursday, February retail sales, another gauge of economic activity, will be released.

The two inflation reports, and the retail sales are among the last key economic reports expected before the Federal open market committee (FOMC) meeting on March 20.

Last week, Fed chair Jerome Powell said that while he expected interest rate cuts “at some point this year”, the FOMC still wants to see more data indicating inflation is coming down before committing to cutting rates.

According to data from the CME Group, markets are pricing in a likelihood of nearly 100% that the Fed will keep rates unchanged next week.

TreasuryONE currency strategist Andre Cilliers said despite that hotterthan-expected US consumer inflation data, markets are still betting on a June rate cut by the Fed. “The focus is now on the US PPI and retail sales numbers, which will be out later this week, setting the scene for the FOMC meeting next week.

“The rand’s current trading range of 18.50/18.85 remains intact for now,” said Cilliers.

At 6.01pm, the rand had strengthened 0.59% to R18.5611/$, touching the intraday best of R18.5338/$. It had firmed 0.46% to R20.3056/€ and 0.56% to R23.7474/£. The euro was 0.14% firmer at $1.0941.

The JSE all share gained 1.05% to 74,258 points and the top 40 1.15%. Precious metals rose 4.61%, resources 2.73%, industrial metals 1.14%, food producers 1.24%, industrials 0.68%, retailers 0.61%, SA listed property 0.4%, banks 0.35% and financials 35%.

Northam Platinum led the gains on the local bourse and in the precious metals sector, rising 10% to R115.29, the biggest one day gain since April. While Impala Platinum followed in the sector, adding 9.97% to R76.32, Anglo American Platinum 7.45% to R797.10, Sibanye-Stillwater 5.15% to R21.16 and Harmony Gold 3.95% to R147.66.

At 6.15pm, the Dow Jones industrial average was 0.43% firmer at 39,173 points. In Europe, the FTSE 100 gained 0.34% and France’s CAC 40 0.7%, while Germany’s DAX was little changed. Gold gained 0.67% to $2,172.73/oz, while platinum rose 2.12% to $939.50/oz. Brent crude was 1.8% firmer at $83.59 a barrel.