The JSE was firmer on Thursday morning, while its global peers were mixed as investors digested the move by the Federal Reserve (Fed) to hike interest rates despite concerns about the banking sector.
The Federal open market committee (FOMC) raised rates by 25 basis points (bps) as expected by some market participants. Fed chair Jerome Powell hinted at a further 25bps still to come, while also stating that rate cuts for 2023 were not on the Fed’s radar.
Despite Powell noting that rate cuts for 2023 were not on the central bank’s radar, “markets are betting that the Fed terminal rate is close and that the Fed will have to cut before the end of the year as a recession looms,” said TreasuryONE currency strategist Andre Cilliers. “The next FOMC meeting is only in May, and we will have two rounds of economic data prints before then that could change the outlook significantly.”
At 10.15am, the JSE had gained 0.43% to 75,564.89 points and the top 40 0.44%. Precious metals had added 0.99%, retailers 0.74%, industrials 0.71% and resources 0.22%.
At the same time in Europe, France’s CAC 40 had lost 0.16% and Germany’s DAX 0.11%.
Earlier in Asia, the Shanghai composite added 0.64% and Hong Kong’s Hang Seng 2.15%, while Japan’s Nikkei lost 0.17%.
Citadel Global director Bianca Botes said the Fed’s 25bps hike, together with its more dovish stance, indicated that the US central bank was approaching a pause in its hiking cycle. “This sent the dollar to seven-week lows, while the pound and the euro both rallied.”
At 10.17am, the rand had strengthened 0.65% to R18.1351/$, 0.13% to R19.7717/€, and 0.16% to R22.3273/£. The euro was 0.45% firmer at $1.0906.
Gold gained 0.36% to $1,976.46/oz and platinum 1.34% to $990.56/oz. Brent crude was 1.02% firmer at $76.46 a barrel.
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