The JSE tracked slightly weaker in morning trading, with the all share and top 40 indices down nearly 1%, while the rand gained on the back of a second US rate cut.
However, at 11am, the rand was down 0.85% against the dollar at R17.44551/$, giving up some of its overnight gains, and 0.65% weaker against the euro at R18.80239/€.
The local currency had strengthened to about R17.27/$ yesterday, closing at R17.31/$, but fell as markets were factoring in a 75% chance of another 25 basis point (bps) cut in the US this year, according to Investec chief economist Annabel Bishop.
“With the US cutting its interest rates last night, the differential between SA’s interest rates and that of the US has widened, improving investor sentiment and strengthening the rand, as the US is expected to cut by 50 bps more than SA this year,” said Bishop.
The rand has also gained as it recovers from the losses seen as a result of the US election, which will see Donald Trump becoming the second US president in history elected for two non-consecutive terms.
TreasuryOne currency strategist Andre Cilliers said: “The currency’s recovery from losses sustained post-election is notable, as it benefits from a favourable interest rate differential and renewed foreign interest in emerging markets.
“The rand could potentially test support at R17.26/$, with the R17.60/$ level acting as resistance heading into the weekend.”
In the commodities markets, precious metals and oil continued the downward trend seen since Trump’s victory, which sent investors flocking to the safe-haven dollar.
Gold was down 0.63$ at $2,688.68/oz, having recovered slightly in the past few days but not enough to get back above the $2,700/oz level. Platinum was down 0.78%, palladium down 1.56%, silver down 1.76% and brent crude was down 1.39%.
Changes in indices were mixed in morning trading, with banks and financials ticking up slightly. However, mining stocks continue to drive the JSE's losses, with resources down 2.36%, precious metals and mining down 2.37% and industrial metals and mining down 2.14%.
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