US Federal Reserve chair Jerome Powell. Picture: REUTERS
US Federal Reserve chair Jerome Powell. Picture: REUTERS

SA stocks could benefit from a more dovish than expected tone from US Federal Reserve chair Jerome Powell, who signalled late on Wednesday that the central bank could support the economy with rate cuts.

After US jobs data beat expectations last week, investors fretted that the Fed would scale back its rate cut plans.

But Powell said uncertainties around trade tensions and concerns about the strength of the global economy were weighing on the US economic outlook, with inflation pressures still “muted”.

“Anyone fearful that Fed chair Jay Powell might be about to cast aspersions on the likelihood of the Federal Open-Market Committee agreeing to cut rates when it next meets on July 30 and 31 needn’t have worried,” said Ray Attrill, foreign exchange strategy head at National Australia Bank. 

Hong Kong’s Hang Seng Index was 1.2% up at the lunch break on Thursday, while the Shanghai Composite added 0.3%. Korea’s Kospi advanced 1.2%, Japan’s Nikkei 225 rose 0.5% and Australia’s main benchmark also added 0.5%.

Chinese internet and gaming giant Tencent, which influences the JSE via major shareholder Naspers, was 0.5% higher in Hong Kong. 

JSE heavyweight BHP Group gained 0.6% in Australia.

No major company results are expected locally on Thursday.  Stats SA will publish mining and manufacturing data for May. 

Elsewhere, the European Central Bank is expected to publish a monetary policy meeting report, while US consumer inflation and initial jobless claims figures are due later in the day.

The rand was also given a boost by Powell’s comments, having strengthened back below R14/$ late on Wednesday.

The local currency was at R13.93/$, R17.47/£ and R15.71/€ in early trade on Thursday.

hedleyn@businesslive.co.za