The JSE closed the final shortened trading session of 2023 firmer, while global peers were mixed.The rand trimmed losses for the year as the US dollar eased from its highs.
The JSE all share index rose 5.3% for the year, bolstered by gains in financial, industrial and banking stocks, with the respective indices adding 14.95%, 14.08% and 11.11%.
Miners, however, poured cold water on the local bourse’s overall gains for the year, with industrial metals dropping 19.23%, resources 18.74% and the precious metals and mining index 8.49%.
Investors remain optimistic that the US Federal Reserve is likely done raising interest rates and could even start cutting rates as early as March 2024, and have grown more confident in a possible “soft landing” for the US economy.
At its last meeting, when the Fed held its main interest rate steady at a range of 5.25% to 5.50%, policymakers indicated the end of its tightening cycle and projected at least three rate cuts in 2024.
In a press conference Fed chair Jerome Powell said its main interest rate is “likely already at or near its peak”. He, however, acknowledged that inflation is still too high. Powell said Fed officials don’t want to wait too long before cutting the federal funds rate, which is at its highest level since 2001.
However, a few Fed officials have come out and said talks of rate cuts are premature.
MyWealth Investments CEO Annatjie van Rooyen said there is a good chance the Fed would start cutting rates in 2024.
“Powell commented earlier in December 2023 that the question of when it will be appropriate to cut rates is coming into view.”
“The welcome dovish tone of the Fed chair at the last press conference has subsequently resulted in the long-awaited pivot point in the interest rate cycle being discounted by market participants with the first 25 basis points (bps) cut projected to be implemented at the end of Q1 2024,” said Van Rooyen.
“The core personal consumption (PCE) index, the Fed’s preferred gauge of inflation, dropped to 3.2% in November and remains on track to continue moderating to the target of 2% which is fuelling expectations for a 75 bps cut in interest rates during 2024 at intervals of 25 bps,” she added.
The JSE all share gained 0.53% to 76,893.15 points on Friday while the top 40 added 0.6%.
The rand, which was down as much as 12% for the year recently, trimmed losses to end the year 7% weaker as the dollar eased from its peaks ahead of expected interest rate cuts in 2024.
At 1pm on Friday, the rand was little changed at R18.5117/$, R20.4827/€ and R23.5628/£. The euro was unchanged at $1.1064.
Gold was steady at $2,066.09/oz, while platinum gained 0.21% to $1,005.12/oz. Brent crude was 0.25% firmer at $77.65 a barrel.
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