JSE closes lower in cautious trade

The JSE closed lower on Wednesday as investors remained cautious ahead of the US Federal Reserve’s interest rate decision later in the day.

Markets have largely priced in a 25-basis-point cut from the Fed, with the central bank facing pressure from US President Donald Trump to loosen monetary policy after the European Central Bank cut its rate by 10 basis points last week.

The SA Reserve Bank is set to announce its decision on monetary policy on Thursday.

The consensus among 18 economists polled by Bloomberg is for the repo rate to remain unchanged at 6.5%.

“A key reason for this is that the Bank bases its interest rate decisions on a forward-looking process,” PwC said in a note.

“In July, the monetary policy committee indicated that it expects headline inflation to increase to an average of 5.4% in the first quarter of 2020.

“This will be a notable departure from the Bank’s current favoured level of 4.5% and edging towards the upper limit of the target range [3%-6%].

“As such, it cannot, at this stage, risk lower interest rates.”

The JSE all share fell 1.19% to 56,220.40 points and the top 40 1.45%. Industrials shed 2.32% and resources 0.44%.

Property, however, gained 0.87%.

Sasol dropped 1.13% to R287.71. Bloomberg reported on Wednesday that the company is planning to sell its SA coal mining business.

Afrimat leapt 9.7% to R32.79 after the building supplier said it expects headline earnings per share to increase between 80% and 100%, to between 167.6c and 186.2c, in the year to end-August.

Consumer inflation accelerated to 4.3% in August from a year earlier, up from 4% in July, data from Statistics SA showed.

Retail sales grew 2% year on year in July, down from 2.4% in June. –