JSE could open lower ahead of interest rate decision
SA stocks could follow global markets lower on Thursday, ahead of the SA Reserve Bank’s expected interest rate announcement later in the day.
The Wall Street Journal reported overnight that US-China trade talks were effectively deadlocked over restrictions on technology group Huawei.
The S&P 500 Index closed 0.7% lower overnight.
“Risk assets dipped as trade uncertainty continued to weigh and earnings reports sent mixed signals on the state of the US economy,” ANZ Banking Group said in a note.
Asian stocks followed suit on Thursday. The Shanghai Composite was down 0.8%, Hong Kong’s Hang Seng Index lost 0.5%, Japan’s Nikkei 225 fell 1.8%, Korea’s Kospi 0.3% and Australia’s main benchmark 0.5%.
WeChat owner Tencent declined 1.3% in Hong Kong, suggesting a weak opening for major shareholder and Africa’s biggest public company, Naspers.
JSE heavyweight BHP Group slumped 1.9% in Australia as commodities traded softer amid renewed trade concerns.
Locally, sales updates are expected from miners Anglo American Platinum, Kumba Iron Ore, Anglo American and South32, while luxury goods group Richemont is expected to provide a quarterly trading update.
“Bloomberg is cautious that Richemont’s sales in Asia during the first quarter could come under pressure following protests in Hong Kong,” analysts at FNB Securities said in a note.
“The integration of lower-margin e-commerce deals, investment in e-commerce and marketing, and clean-out of watch inventories in wholesale could place pressure on the operating margin in the second half.”
Stats SA is due to publish data for May on civil debt cases, wholesale trade sales, motor trade sales and private-sector building activity.
Meanwhile, the Reserve Bank is expected to announce a 25-basis-point interest rate cut on Thursday afternoon.
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Investec economists said in a note there was “an outside chance” of another cut in 2019. Consumer price inflation is expected to remain moderate for the foreseeable future, they said.
Ahead of Thursday’s rate call, the rand moved back above the R14/$ mark. The local currency was trading at R14.00/$, R17.41/£ and R15.73/€.