The JSE reversed the session’s gains on Wednesday, while the rand was little changed as investors awaited the outcome of the US Federal Reserve’s final meeting of the year.
Market participants are pricing in a 25 basis points (bps) cut, which is expected to be announced tonight.
Investors will scrutinise the Fed policymakers’ summary of economic projections and chair Jerome Powell’s comments for clues on the central bank’s future policy direction.
The Fed is widely expected to temper market expectations of further rate cuts in 2025, particularly given the persistence of inflationary pressures.
“The Fed is widely expected to cut rates by 25bp, lowering the Fed Funds range to 4.25%-4.50%. However, markets anticipate a hawkish tone, emphasising inflation risks and cautious rate trajectories,” said TreasuryOne currency strategist Andre Cilliers.
The JSE all share lost 0.17% to 85,599 points and the top 40 0.23%. Industrial metals lost 0.88% and industrials 0.62%. Precious metals added 1.1% and retailers 0.24%.
At 6pm, the Dow Jones industrial average was 0.42% firmer at 43,641 points. In Europe, the FTSE 100 was little changed. France’s CAC 40 added 0.4% and Germany’s DAX 30 0.21%.
Cilliers said the Fed faced a tough balancing act as inflation had moderated but remained above the 2% target, requiring vigilance. He said the incoming Donald Trump administration’s pro-growth fiscal policies may create upside inflation risks.
“Globally, easing by the Fed could bolster other central banks’ policy space,” said Cilliers.
“The SA Reserve Bank may only consider further cuts in March 2025, assuming a benign inflation trajectory and fiscal clarity from the February budget.”
The rand was little changed for most of the session, having touched an intraday worst of R18.1041/$.
At 6pm it was flat at R18.0688/$ while it had gained 0.17% to R18.9262/€ and 0.22% to R22.9291/£. The euro had lost 0.2% to $1.0471.
“Despite the dip, the rand remains in its well-established range and relatively resilient, supported by improved local sentiment on government of national unity reforms and positive feedback from ratings agencies,” said Cilliers.
In the commodities markets, gold lost 0.31% to $2,637.8/oz and platinum 1.34% to $927.25/oz. Brent crude was 0.83% firmer at $73.90 a barrel.
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