The Rand came under pressure today following South Africa’s current-account unexpectedly falling into a deficit in the second quarter as imports outweighed exports and companies paid higher dividends, reports Bloomberg while the European Central Bank (ECB) hiked the interest rate sharply.
The US dollar is up nearly 1.5% against the rand with the local unit struggling and currently trading at R15.82 versus the greenback.
The JSE closed 0.82% with the All Share Index at 67,260 points.
The ECB announced a 75 basis point hike on Thursday while markets had largely priced in the large hike, which was widely expected.
“This major step frontloads the transition from the prevailing highly accommodative level of policy rates towards levels that will ensure the timely return of inflation to the ECB’s 2% medium-term target,” it said in a statement.
The ECB added that it would hike rates further with inflation still far too high and likely to stay above target for an extended period.
Reuters reports that the US Federal Reserve is likely to follow the ECB in hiking interest rates.
“Money markets lay 79% odds that the Fed will hike by another 75 basis points at this month’s meeting, which would increase the fed funds rate to 3.0% to 3.25%.”
Back on the local bourse, Capitec shares sank 9.41% despite the bank flagging double-digit earnings growth for its half-year to end-August.
The bank said in a trading update that headline earnings per share are expected to rise by between 15% and 18%. Capitec said it expected its interim results to be released on or around September 29.
In a trading update, financial services firm Sasfin said headline earnings per share will increase by between 19.11% and 27.33%. Its shares gained 2.82% by the close of trade on Thursday.
Life insurer Sanlam said it did not expect an industry probe from competition authorities to reveal any dodgy practices in its business after the competition commission launched a probe in late August into alleged collusive behaviour of South Africa’s largest insurers.
The firm did say it was concerned about reputational damage from the probe.
On Thursday it released its interim results to end-June with the company saying, “The net result from financial services from life insurance was up 23%, investment management was up 25% and our credit operations were up 22%. Our general insurance net result from financial services declined by 57%.”
