JSE slips ahead of US rate decision

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 25basis-point cut from the Fed after the European Central Bank cut its deposit 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. In July, the monetary policy committee (MPC) indicated that it expects headline inflation to increase to an average of 5.4% in the first quarter of 2020,” PwC said in a note. “This will be a notable departure from the Bank’s current favoured level of 4.5% and edging towards the upper limit of the official target range (3%6%). As such, the MPC cannot, at this stage, risk lower interest rates.”

Shortly after the JSE closed, the Dow was down 0.2% to 27,055.88 points. ’The s CAC FTSE 40 had 100 added was 0.22% flat, while and France

Germany’s DAX 30 0.21%. Earlier, the Shanghai composite rose 0.25%, while Hong Kong’s Hang Seng fell 0.13% and Japan’s Nikkei 225 0.18%.

At 5.20pm, the rand had strengthened 0.39% to R14.6408/$, 0.5% to R16.1943/€ and 0.55% to R18.2676/£. The euro was flat at $1.1061.

Gold rose 0.47% to $1,508.18/oz but platinum lost 0.58% to $934.81. Brent crude added 0.33% to $64.20 a barrel.

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 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 materials supplier said on Wednesday that it expects its headline earnings per share to increase by between 80% and 100% to between 167.6c and 186.2c in the period ended August 31.

EOH fell 0.79% to R12.60 after the company said on Wednesday it expects a headline loss per share of 973c from continuing operations in the year to end-June.

Pan African Resources lost 2.63% to R2.22. The gold miner said on Wednesday that its headline earnings per share grew 20.2% to 1.19 US cents in the year to end-June.

Richemont slumped 5.95% to R109.44 after the company’s stock was downgraded to sell from neutral by Swiss investment bank UBS.