JSE set for mixed start on Wednesday as market awaits Fed clues
Chair Jerome Powell to present to the US congress amid speculation that rates may not be cut
SA stocks could open mixed on Wednesday as investors await the testimony by US Federal Reserve chair Jerome Powell later in the day.
Powell will present to congress on Wednesday and the senate on Thursday, with minutes from the Federal Open Market Committee and the European Central Bank also due over the two days.
Better-than-expected jobs data from the US last week has led to doubts about the need for aggressive interest rate cuts in the world’s largest economy, which in turn has weighed on global equities.
Investors will closely watch Powell’s testimony for clues about the Fed’s monetary policy stance going forward.
Asian stocks were mixed on Wednesday, with Hong Kong’s Hang Seng Index gaining 0.3%, the Shanghai Composite flat and Korea’s Kospi up 0.7%. Japan’s Nikkei 225 index was flat and Australia’s main benchmark advanced 0.3%.
WeChat owner Tencent rallied 1.2% in Hong Kong, suggesting a positive start for major shareholder and JSE heavyweight Naspers.
But JSE-listed BHP Group was 0.4% down in Australia.
No major company results are expected in SA on Wednesday, while the result of a local trade conditions survey is due.
The rand, which will likely react to Powell’s testimony later in the day, was trading at R14.19/$, R17.67/£ and R15.90/€ on Wednesday morning.
“While the rand has remained stable, a less dovish Fed is likely to add some pressure to the local unit, which could set its sights on the R14.30/$ mark,” said Bianca Botes, treasury partner at Peregrine Treasury Solutions.
Meanwhile, with the pound under pressure amid Brexit uncertainties, a recovery in the dollar and poor economic data, “we see a buying opportunity for anybody looking to purchase pounds”, Botes said.