The JSE tracked firmer global markets on Wednesday as investors focused on the Federal Reserve’s latest policy decision.
The Fed is expected to increase its benchmark interest rate as policy-making officials wrap up a two-day meeting later in the evening.
Market participants are pricing in another 25-basis-point (bps) rate hike, and will be looking to Fed chair Jerome Powell’s media conference for clues on whether the world’s most influential central bank will keep rates steady after this meeting or tighten further to fight decades-high inflation.
Investors are also looking to hear what Powell and his policy committee members say about the overall economic outcome, as well as a banking crisis that has already brought down three US financial institutions. The banking sector issues have weighed on investors’ minds so far this week as the US earnings season continues.
The Fed is scheduled to release its latest policy announcement at 8pm local time, with Jerome Powell scheduled to hold a news conference at 8.30pm.
“While the Fed announces its latest interest rate decision, investors will be hanging on their every word in light of recent banking sector instability,” said Oanda senior market analyst Craig Erlam.
“This Fed meeting was always likely to mark the end of the US central bank’s tightening cycle — not that it has explicitly signalled this — but we’ve now reached a stage in which every rate hike could have unwanted and unintended consequences,” said Erlam.
“Turbulence in the banking system in March is evidence of that and the rescue of First Republic Bank by JPMorgan in recent days, and the sell-off that followed in other regional banks, suggests significant stress remains.”
The JSE all share gained 0.88% to 78,218 points and the top 40 0.96%. Precious metals rose 2.55%, resources 1.68%, industrial metals 1.34% and industrials 1%. Banks and financials were both down 0.34%.
At 6.05am, the Dow Jones industrial average was little changed at 33,674 points, while the S&P 500 added 0.13%. In Europe, the FTSE 100 gained 0.2%, France’s CAC 40 0.28% and Germany’s DAX 0.56%.
The rand gained the most in almost three weeks, touching the intraday best of R18.2396 against the dollar. At 5.40pm, the rand had strengthened 1.06% to R18.267/$, 0.61% to R20.1857/€ and 0.47% to R22.9143/£. The euro was 0.44% firmer at $1.1048.
Gold gained 0.39% to $2,024.23/oz, while platinum lost 1.29% to $1,051.30/oz. Brent crude fell 3.61% to $72.45 a barrel.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.