The JSE was slightly weaker on Thursday morning while its global peers were mixed as investors digested a surprise hike by the Bank of Canada (BoC).
The BoC announced on Wednesday that it raised the benchmark interest rate 25 basis points (bps) to 4.75%, after its June policy meeting. The decision came in higher than the market’s expectation of 4.5%.
In its policy statement, the BoC said that concerns had increased that consumer price index (CPI) inflation could get stuck materially above the 2% target.
Since the BoC was the first major central bank to pause its interest-rate hiking cycle in March, investors are reassessing the risks from inflation after bond yields surge globally following the BoC’s surprise rate hike, reported Bloomberg.
“This [the surprise hike by the BoC, just after an unexpected rate hike in Australia earlier in the week] is causing concern in the markets that more unexpected hikes from central banks that were expected to pause their rate hiking cycles, might be on the cards, and that the US Federal Reserve might move to do the same next week,” Citadel Global director Bianca Botes said.
At 10.38am, the JSE all share had lost 0.1% to 77,045.26 points and the top 40 was down 0.15%. Banks had added 0.7% and financials 0.68%. Precious metals had lost 2.34% and industrial metals 0.27%.
At the same time in Europe, the FTSE 100 had lost 0.12%, while Germany’s DAX had gained 0.2% and France’s CAC 40 was up 0.14%. Earlier in Asia, the Shanghai Composite added 0.49% and Hong Kong’s Hang Seng 0.13%, while Japan’s Nikkei lost 0.85%.
At 10.44am, the rand had strengthened 0.59% to R18.9633/$, 0.27% to R20.3270/€ and 0.35% to R23.6463/£. The euro was 0.2% firmer at $1.0718.
Gold gained 0.44% to $1,948.24/oz and platinum 0.25% to $1,021/oz. Brent crude was little changed at $76.79 a barrel.
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