MARKET WRAP: JSE slips with US Fed leery of more rate cuts

19 September 2019 - 19:42 By Odwa Mjo

The JSE closed lower on Thursday, after the US Federal Reserve downplayed expectations that it may lower interest rates further after a 25-basis-point cut on Wednesday.

Varying views among policy makers regarding the US interest rate decision dampened market expectations that the Fed may embark on an easing cycle. Three members voted against Wednesday’s cut with one proposing a 50-basis-point cut. The Fed cited the prolonged US-China trade war and weak global economic growth as ongoing risk factors.

Locally, the Reserve Bank kept the interest rate at 6.5%, which was the consensus among 18 economists polled by Bloomberg. The Bank revised its inflation forecast for 2019 down to 4.2%, from 4.4% previously.

“Barring significant shocks, monetary policy in major advanced economies will remain accommodative over the medium term. However, market expectations of further accommodation appear high, creating ongoing risk of market volatility should these not materialise,” Reserve Bank governor Lesetja Kganyago said.

At 5.20pm, the rand was flat to R14.6827/$, while it had weakened 0.17% to R16.2297/€, and was unchanged at R18.3379/£. The euro had firmed 0.22% to $1.1053.

Gold added 0.29% to $1,498.39/oz and 1.42% to $939.91. Brent crude was up 1.42% to $64.50 a barrel.

Shortly after the JSE closed, the Dow was up 0.35% to 27,242.67 points. In Europe, the FTSE 100 added 0.62%, France’s CAC 40 0.65%, and Germany’s DAX 0.57%.

Earlier, the Shanghai Composite rose 0.46% and Japan’s Nikkei 225 0.38%, while Hong Kong’s Hang Seng fell 1.07%. 

The JSE all share fell 0.17% to 56,123.80 points and the top 40 0.11%. Platinum miners dropped 1.04% and industrials 0.18%. 

Blue Label Telecoms gained 3.77% to R2.75 after it said on Thursday that it expects its headline and core headline earnings per share (HEPS) to decrease by more than 20% in the year to end-May. 

Mr Price rose 0.79% to R159.05. The retailer said earlier that it faced potential financial exposure of between R10m and R20m in an investigation into a relationship between two senior managers and one of its suppliers.

Texton climbed 4.73% to R3.10, after the property fund said on Thursday that its diluted earnings and HEPS grew 107.5% to 55.61c in the year to end-June.

Caxton jumped 8.38% to R7.50. The publishing company said on Thursday that its HEPS fell 6.8% to 101.6c  in the year to end-June.

Altron climbed 4.17% to R25 after it said on Thursday that Thobela Telecoms, of which it is a minority shareholder, has been granted leave to appeal a July court judgment that set aside the City of Tshwane’s municipal R1.2bn broadband contract.

Remgro gained 1.56% to R177.43, this despite it earlier reporting that its HEPS fell by 4.2% to 1,448.9c in the year to end-June.

Kumba Iron Ore slumped 5.33% to R392.90 and Assore 6.16% to R277.52.