The JSE closed higher on Wednesday as banks and financials gained on a turnaround in the rand.

The local currency firmed to R13.2190 to the dollar from over-sold levels, after weakening to R13.3962 in intra-day trade. This followed gains made by the euro against the dollar, as an expected 25 basis-point rate hike by the US Fed is already priced into the market.

The market took the view that a more hawkish stance from the Fed as part of its future guidance had become less likely, as the Fed would tend to avoid unnecessary risks on the recent slightly higher-than-expected inflation data.

"We do not believe current inflation trends are likely to cause the Fed to move faster or alter its stance of gradual policy normalisation," Barclays Research analysts said.

Local data on the day disappointed, with just a small gain in retail sales reducing the likelihood of rate increases from the South African Reserve Bank. Annual growth in retail sales amounted to 0.5% in April, much lower than the market’s forecast of 4.1% from a downwardly revised 4.6% (previously 4.8%) in March.

Earlier, the RMB-BER business confidence index (BCI) reflected subdued economic conditions, dropping to 39 in the second quarter of 2018, after jumping from 34 to 45 in the first quarter.

The all share closed 0.39% higher at 58,437.20 points and the top 40 rose 0.56%. Banks were up 1.2%, financials 0.68%, and industrials 0.51%. General retailers shed 1.61%, platinums 1.48%, and resources 0.10%.

Naspers closed 1.23% higher at R3,393. It said in a trading statement released on the day that core headline earnings per share (HEPS) for the year to end-March were expected to climb by between 40% and 45%.

Woolworths shed 1.04% to R56.10.

The rand reversed earlier losses to trade firmer against major global currencies in the afternoon, buoyed by international data releases, but with market focus still remaining on the US Fed. Analysts said the rand continued to take its direction from offshore events, with both UK producer inflation data coming in lower than expected, while eurozone industrial production numbers also missed their target.

Local bonds were off recent weakest levels with the R186 last bid at 8.975% from 9.01%. The US 10-year was largely unchanged at 2.9593%.

The top 40 Alsi futures index gained 0.93% to 52,417 points. The number of contracts traded was 29,336 from Tuesday’s 25,769.