The JSE pared losses after a Fed-induced lashing along with other global markets to end the day 0.40% lower on 73,504.04 points. The rand, on the other hand, gave up all its gains in volatile trade to end the day back at the R15.40s opening level. At play was Federal Reserve Chair Jerome Powell’s hawkish speech on measures to tame red-hot inflation and a local interest rate hike.
“After a sharp sell-off in equities overnight, we have seen some normality return to the major indexes in the US. We have seen a high level of volatility in the currency space over the past week and could perhaps have some stability in the next couple of days before the market makes a further shift,” comments forex trading house and market watchers TreasuryONE.
Last night’s FOMC outcome has placed the dollar firmly on the front foot, with the US unit trading at a year low against the euro, and the dollar index breaking above a technical level of 97.00, according to TreasuryONE.
The South African Reserve Bank’s Monetary Policy Committee hiked rates by 25 basis points, much in line with market expectation, and signalled that the outlook on inflation could remain to the upside. “By changing its outlook on where the QPM [Quarterly Projection Model] sees repo at the end of 2022, the market could digest the comments as slightly dovish, which can be the reason the rand traded softer after the meeting,” comments TreasuryONE.
“The rand remains on the brink of the 100-day moving average, and a weekly close below that level could signal further strength in the short term.”
On the commodities front, metal prices, which soared to all-time highs in the previous session on Powell alluding to faster rate hikes to cool the hottest price increases in almost four decades, also cooled, taking local commodity stocks down with them.
Gold and platinum were down 1.24% and 0.73% to last trade at $1,797.10/oz and $1,025.50/oz respectively, while palladium turned the tide, wiping earlier losses to trade 1.52% higher at $2,368.50/oz. Brent crude, which surged to $91 a barrel, backtracked to the last sell for $88.84 a barrel.
Eight of the top-10 major moves down were mining stocks, with tin producer Alphamin (-11.12%) leading the dip. Among the gold stocks losing shine were Harmony (-7.76%), Gold Fields (-7.71%), Anglogold (-7.40%), ARM (-4.09%) and Sibanye-Stillwater (-3.60%). Platinum stocks Northam (-4.62%) and Implats (-3.33%) also felt the heat. Also in the pot of gloom were Naspers (-3.46%), which is aggressively growing its non-Tencent portfolio to ease the pressure from Beijing and the Chinese tech behemoth, and investment holding company Transaction Capital ( -4.39%), which succumbed to profit-taking after its strong run in the previous session.
On the upside, Sasol (+3.68%) tracked the oil price higher, which ended the local market session just over 1% up at $90.80.
Kumba gained 2.08% after flagging a 50% jump in 2021 full-year profit on high iron ore prices.
Furniture retailers Lewis Group gained 4.24% after reporting continued sales growth and an improved debtors book in a trade update for the nine months to end-December 2021, and Steinhoff shot up 3.15% following a quarterly trade update from subsidiary Pepkor (-1.05%) in which it said revenue for the three months to end-December rose 1.3% to R22.8bn.