The JSE closed marginally firmer on Tuesday, with global markets mixed as investors awaited the US Federal Reserve’s policy meeting while keeping a watchful eye on the geopolitical tension in the Middle East.
The federal open committee meeting (FOMC) will conclude its two-day policy meeting on Wednesday, and Federal Reserve chair Jerome Powell is expected to deliver the policy statement. The Fed is expected to keep interest rates unchanged, but investors will be looking for clues on whether the central bank will deliver its first cut at its September meeting.
Investors are watching geopolitical tension in the Middle East after reports that Israel is gearing up to launch an attack on Lebanon after a deadly rocket strike in the Israeli-occupied Golan Heights. Market watchers were concerned that it could trigger an all-out war with Hezbollah, reported Al Jazeera.
“The escalating tensions between Israel and Hezbollah, along with some caution ahead of [the] FOMC meeting, are keeping the market gains in check,” said TreasuryOne currency strategist Andre Cilliers.
The JSE all share gained 0.23% to 81,198 points — with major indices mixed — while the top 40 added 0.3%.
At 5.40pm, the Dow Jones industrial average was 0.13% firmer at 40,590 points and markets were mixed in Europe.
Investors will watch out for corporate updates from some of the top tech companies this week. Microsoft’s quarterly report is due later, which will set the stage for results from Apple, Amazon and Meta in the coming days.
Markets are closely watching for any sign that huge investments in artificial intelligence (AI) are starting to pay off. The topic is especially in focus after July’s volatile ride for stocks underlined the risks of the AI trade, as investors rotated out of big tech making up the “Magnificent Seven” and into small caps, reported Bloomberg.
“This week is shaping up to be a crucial one for stocks, with three key events that will help investors determine if the recent market downturn is reversing: the Fed’s interest rate decision, the July employment report [nonfarm payroll due on Friday], and earnings results from four of the largest tech companies,” said FXTM senior research analyst Lukman Otunuga.
“These events will help investors balance their hopes for interest rate cuts with concerns about the slowing growth of big tech companies.”
The rand held steady on the day, regaining some ground after falling as much as 1.5% to R18.52/$ in intraday trading in the previous session. At 5.34pm, the rand had strengthened 0.41% to R18.3525/$, 0.54% to R19.8336/€ and 0.57% to R23.5482/£. The euro was 0.14% weaker at $1.0806.
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