The JSE was firmer on Friday morning, with global markets mixed after rates cuts from the SA Reserve Bank and US Federal Reserve.
In a widely expected move, the Reserve Bank’s monetary policy committee (MPC) announced a 25 basis point (bp ) cut in its benchmark repo rate, lowering it to 8%. SA’s inflation rate has been trending downward, reaching 4.4% in August, below the Bank’s midpoint target of 4.5%.
Bank governor Lesetja Kganyago said MPC members considered an unchanged stance and cuts of 25bp cut or 50bp — with the 25bp cut a unanimous decision.
The Bank move follows a 50bp interest-rate cut by the Fed on Wednesday, its first reduction in four years. The significant policy move is seen by some analysts as an aggressive start to a monetary-easing cycle in the world’s largest economy.
The cuts by the Fed and the Reserve Bank have big implications for financial markets, signalling a supportive monetary policy environment that could drive economic growth and boost investor confidence.
The rate cuts are expected to particularly benefit interest rate-sensitive sectors, including financials, property, retail and construction.
“Global investor risk appetite remained supported by the Fed’s surprise 50bp rate cut,” said RMB analysts. “Improved sentiment was reflected in robust gains across risk assets, including equities, commodities, and emerging market currencies.”
At 10.45am, the JSE all share had gained 0.42% to 84,115.32 points, with major indices mixed, while the top 40 had added 0.37%
At the same time in Europe, the FTSE 100 was down 0.44%, France’s CAC 40 0.85% and Germany’s DAX 0.93%.
Earlier in Asia, the Shanghai Composite was little changed, while Hong Kong’s Heng Seng gained 1.23% and Japan’s Nikkei 1.53%.
Meanwhile, the Bank of Japan (BoJ) took a cautious stance and kept rates unchanged as expected, despite inflation being at a 10-month high. The BoJ said it expected inflation to rise further and for the economy to grow steadily, opening the way for rates to rise fairly soon. The People’s Bank of China also kept rates unchanged despite the ailing economy.
The rand was on track to break a seven-day winning streak, but remains around the best levels last seen in July 2023.
“Reluctance by the People’s Bank of China to cut short-term policy rates despite the Fed’s surprise 50bp rate cut and lacklustre Chinese economic activity could dampen rand's sentiment,” said RMB analysts.
At 10.42am, the rand had weakened 0.18% to R17.5462/$, 0.34% to R19.5945/€ and 0.59% to R23.3378/£. The euro was little changed at $1.1167.
In the commodities markets, gold gained 0.91% to $2,609.94/oz and platinum 0.38% to $989.5/oz. Brent crude was 0.28% weaker at $74.69 a barrel.
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