SA MARKETS HIT BY FED MOVE

THE HAWKISH decision by the US Federal Reserve last Wednesday to start increasing interest rates a year earlier than anticipated and increase its projections for the US inflation rate upwards, rattled the South African markets.

Stock prices on the JSE and globally, as well as precious metals and other commodity prices, tumbled during the last three days of the week.

Analysts now believe that the Fed might also start to taper down on its $120 billion (about R1.6 trillion) a month bond-buying programme as soon as the end of the year. In reaction, the rand took a hiding against the major currencies and bond rates increased sharply.

On the JSE, the all share index lost 3.1 percengt (2 088 points) mostly last Wednesday to Friday. This was the lowest weekly close of the index since February 5.

The sharp decrease in commodity prices, led the Resources 10 index to lose 7.3 percent last week. The Financials index was down 4.7 percent and listed property lost 1 percent.

The much weaker rand contributed to rand hedging shares to be the winners for the week as the Industrial 25 index gained 0.4 percent.

On the foreign exchange market, the rand traded 60 cents weaker at R14.31 to the dollar on Friday evening against the R13.71 level the previous week. Against the pound, the currency depreciated by 40c to trade on R19.76 and against the euro the rand was weaker by 38c at R16.98, testing the R17 level.

Over the week, the gold price fell by $103 an ounce at $1 777 and Platinum lost $102 to $1 050.

On the capital market, the short term R187 treasury bond traded up 40 points on 7.38 percent, losing about 4.23 percent yield for the week.