The JSE closed weaker on Friday, as investors digested the SA Reserve Bank’s rate hike decision and the market took a breather after hitting record highs this week. The latest surge in Covid-19 infections in Europe weighed on global sentiment.
The local bourse extended Thursday losses, pausing for breath after strong gains this week which saw the all-share index hit a record high of 71,447 points.
Europe has become the centre of the Covid-19 pandemic again, as surging cases forced some countries, including Austria and Germany, to reintroduce restrictions ahead of the festive season. Cases are also on the rise in the US.
“New lockdown measures in Austria and Germany wiped out earlier gains and forced stock markets to close weaker,” said Oanda senior market analyst Craig Erlam.
“The recent Covid-19 situation is not quite so severe, but that could change in the coming weeks, as we saw around the same time last year,” added Erlam. “High vaccination rates mean the link between case numbers and fatalities is far lower, but the former is rising at a remarkable rate which is clearly making it very hard to ignore.”
The JSE all share lost 0.69% to 70,376 points and the top 40 0.65%. Retailers fell 2.19%, banks 2.01%, financials 1.7% and precious metals 1.16%. Industrial metals added 1.1%.
At 5.45pm, the Dow Jones Industrial Average was 0.61% weaker at 35,653 points. In Europe, the FTSE 100 had lost 0.51%, France’s CAC 40 0.6% and Germany’s DAX 0.56%.
The SARB’s monetary policy committee (MPC) increased the repo rate by 25 basis points to 3.75% on Thursday — with three MPC members voting for an increase and two for the rate to be maintained.
The MPC’s decision comes amid rising concern about signs of sustained global inflation, which is exerting pressure on central banks to tighten monetary policy.
“The SARB’s rate hike is seen as a pre-emptive move as inflationary pressures are on the upside,” said TreasuryONE currency strategist Andre Cilliers. “However, the decision appears to have disappointed markets, which, along with the contagion from the rate cut in Turkey, saw the rand come under pressure.”
The rand extended its losses on Friday, reaching an intraday low of R15.77848/$ — its worst level since August.
At 5.32pm, the rand had weakened 0.48% to R15.7110/$ and 0.18% to R21.1421/£, while it was little changed at R17.7715/€. The euro was 0.51% weaker at $1.1312.
Gold was unchanged at $1,859.71/oz, while platinum lost 0.84% to $1,041. Brent crude fell 2.41% to $79.02 a barrel.
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