JSE joins the global attempt at rebound

The JSE closed firmer on Thursday, tracking an attempted rebound on global markets, though it is headed for another monthly loss.

The local bourse is down more than 3% so far this month as the higher-for-longer interest rates narrative sets in, coupled with concerns about rising crude oil prices and the effect on inflation.

The US Federal Reserve has hiked interest rates to the highest level since 2001 in a bid to bring inflation down to its 2% target, but that has hurt the performance of stocks as investors seek more attractive returns elsewhere.

Bloomberg reported that markets are discounting a 23% chance the federal open market committee will raise rates by 25 basis points at the next meeting that ends on November 1, and a 46% chance for another 25 basis points hike at the following meeting that ends on December 13.

“A drop in oil prices took some of the pressure off the stock market, a day after crude reached its highest level of the year,” said FXTM senior research analyst Lukman Otunuga. “However, the Fed staying tough on interest rates, something that markets call a “hawkish” stance on policy, remains on investors’ minds.”

The JSE all share gained 0.46% to 72,505.99 points and the top 40 also added 0.46%. Industrial metals rose 2.94%, resources 1.62% and banks 0.68%. Food producers lost 1.22% and precious metals 1.12%.

At 7.01pm, the Dow Jones industrial average was 0.42% firmer at 33,690.11 points, with markets also marginally firmer in Europe.

Bloomberg also reported a US government shutdown could be imminent on October 1 as House speaker Kevin McCarthy has not been able get legislators to agree on a temporary spending bill. Senate minority leader

Mitch McConnell is backing a bipartisan plan to avoid a shutdown and has publicly separated himself and Senate Republicans from House Republicans who are against an agreement.

“Many other challenges are also looming over the US economy and markets besides the threat of higher interest rates for longer,” Otunuga said. “The most immediate is the threat of another US government shutdown as soon as this weekend. Financial markets have, however, held up rather well during past shutdowns.”

The rand broke three straight days of losses against the dollar, reaching an intraday best of R18.9588/$. At 6.18pm, it had strengthened 1.11% to R18.9876/$, 0.63% to R20.0557/€ and 0.53% to R23.1877/£. The euro was 0.63% firmer at $1.05696.

Gold lost 0.65% to $1,862.73/oz, while platinum rose 2.22% to $906.70/oz. Brent crude was 0.7% weaker at $93.73 a barrel.