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JSE down on fears of prolonged hikes

Lindiwe Tsobo tsobol@businesslive.co.za

The JSE closed weaker in line with global markets on Wednesday as concern grows that the US Federal Reserve could implement rate hikes for longer than previously expected.

Though markets expect a smaller increase in US rates in December, investors fear further hikes are likely that would take the cost of borrowing to a higher level than anticipated.

“Equity markets struggled again on Wednesday as concerns around global growth mount,” Citadel Global director Bianca Botes said. “Analysts are noting that negative growth and falling profits could replace the inflation and interest rate agenda in the coming months.”

The JSE all share lost 0.73% to 74,011.12 points. The top 40 fell 0.81%, led by industrial metals (-1.66%), resources (-1.05%), financials (-0.84%), banks (-0.74%) and industrials (-0.61%). Food producers added 2.65%, retailers 0.62% and precious metals 0.33%. At 7.08pm, the Dow Jones industrial average was little changed at 33,594.30, while the broader S&P 500 was down 0.24%.

European markets were weaker, with the UK’s FTSE 100 closing 0.43% lower and France’s CAC 40 down 0.41%. Germany’s DAX fell 0.57%.

China further eased Covid restrictions on Wednesday, including allowing some people to quarantine at home rather than in centralised camps “in a sharp change in the national strategy to quell public discontent and fire up the economy again,” Bloomberg reported.

The news agency had earlier reported that changes were imminent and further easing suggests the Chinese government is willing to tolerate higher case numbers to avoid more social and economic turmoil.

“Even with China relaxing its Covid restrictions, which should bolster that country’s economy, investors have become increasingly worried that the Federal Reserve may keep up its inflation-fighting rate hikes for longer than hoped for,” TreasuryONE currency strategist Andre Cilliers said.

“The rand, however, held its own against a broadly firmer US dollar, continuing its early-week recovery as China continued easing restrictions and political uncertainty receded,” Cilliers said.

The local currency gained for the fourth consecutive session, strengthening to an intraday best of R17.0495/$, and at 6.55pm, it was 0.85% stronger at R17.1713/$. It had also appreciated 0.51% to R18.0352/€ and 0.38% to R20.9368/£. The euro was 0.35% stronger at $1.0503.

Gold gained 0.76% to $1,782.51/oz and platinum was 1.69% higher at $1,003.20/oz. Brent crude fell 2.1% to $77.99 a barrel.

MARKETS

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2022-12-08T08:00:00.0000000Z

2022-12-08T08:00:00.0000000Z

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