The rand bounced back from its earlier losses on Wednesday, while the JSE also trimmed its losses as investors digested the latest inflation reports from SA and the US.
In the US, November’s inflation report met economists’ expectations, paving the way for the Federal Reserve (Fed) to cut interest rates again at its December meeting. The consumer price index (CPI) rose 0.3% from October and 2.7% from the previous year.
Core CPI, which excludes volatile food and energy prices, increased 0.3% on the month and 3.3% on an annual basis.
Despite the slightly higher inflation rate, traders believe it is still low enough for the Fed to cut rates again. In fact, Fed fund futures are pricing in a 96% likelihood of a rate cut at the next meeting.
In SA, annual consumer inflation accelerated to 2.9% in November from 2.8% in October, data from Stats SA showed. However, CPI remained flat month on month, indicating overall price stability.
Core inflation softened to 3.7% year on year from 3.9% previously.
According to FNB economist Koketso Mano headline inflation is expected to continue rising steadily into 2025, but is unlikely to surpass 4% until the end of the year.
Mano warned that growing trade restrictions and geopolitical tensions could drive inflationary pressure and keep monetary policy tighter than expected.
According to FNB, the SA Reserve Bank is expected to cut interest rates by 25 basis points at each meeting until May 2025. “However, the monetary policy committee will remain cautious due to the risk of higher global inflation and tighter financial conditions,” said Mano.
At 6pm, the rand had strengthened 0.53% to R17.7036/$, 1.02% to R18.5518/€ and 0.69% to R22.5575/£. The euro was 0.36% weaker at $1.049.
The JSE lost 0.18% to 87,115 points, with major indices mixed, while the top 40 was down 0.29%.
At 6.35pm, the Dow Jones industrial average was little changed at 44,290 points, while markets were firmer in Europe.
Barloworld led gains on the JSE, with its share price closing up 15.49% to R107, gaining the most since June 2020 — after the company said a consortium, including its CEO, had offered to buy and delist the company, which went public in 1940.
The shares rose as much as 21% to R111.30 in intraday trading — the biggest one-day gain since at least 1999 — after the announcement of the offer, which values the company at R23bn.
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