JSE's office in Sandton, Johannesburg. Photo: Simphiwe Mbokazi/ independent Newspapers
Stocks on the JSE began the week on a weaker footing and the rand moderated slowly from the four-month lows it ended on Friday as the US dollar was still strengthened by signs of delayed rates cut in the US.
The JSE All Share index fell more than 1% to below 73 400 points yesterday, mainly pressured by resource-linked stocks.
Sasol led the losses, down nearly 6%, after the chemical and energy giant reported that its net profit for the first half of its 2024 fiscal year ending December 31, 2023, fell by 34%, underscoring the difficulties confronting the energy industry in the face of economic strains.
Meanwhile, investors looked ahead to the latest reading of the Federal Reserve’s (Fed) preferred inflation gauge this week as well as several corporate earnings reports and soaring US Treasury yield.
This saw the rand sliding 0.2% to 19.34 by 5pm as the negative mood following the Budget speech persists and the risk for further weakness in the short term remains.
But this was slightly better than the R19.39/$1 mark the rand weakened to as US monetary policy officials communicated that there was “no rush” to cut US interest rates, with a need to wait longer to have the “confidence” to cut.
TreasuryONE currency specialist Andre Cilliers said yesterday that the dollar was still strong on rate-cut doubts and China woes.
Cilliers said the dollar had started the week on the front foot as the timing of rate cuts by the Fed was delayed further, adding that the markets would be looking at the US personal consumption expenditure inflation number on Thursday for clues as to when the Fed could start cutting rates.
“Risk-sensitive currencies have not been helped by concerns over the state of the Chinese economy. Hong Kong equity markets and mainland China are under pressure, partly because of worries about China following the loss of credit ratings for 11 Chinese companies by Moody’s,” Cilliers said.
“This situation highlighted the issues arising from a high number of defaults. Investors are now watching to see if the Chinese government will introduce more financial support measures, especially after President Xi Jinping emphasised the need to boost sales of items like cars and home appliances.”
BUSINESS REPORT