John Williams, president and CEO of the Federal Reserve Bank of New York. Picture: REUTERS/LUCAS JACKSON/FILE PHOTO
John Williams, president and CEO of the Federal Reserve Bank of New York. Picture: REUTERS/LUCAS JACKSON/FILE PHOTO

SA stocks could open higher on Friday morning as stocks globally rally on renewed optimism about US interest rate cuts.

Late on Thursday, John Williams, CEO of the Federal Reserve Bank of New York, said in a speech it was “better to take preventative measures than to wait for disaster to unfold”.

His dovish comments “boosted the probability of a 50 basis point cut” by the US Federal Reserve and lifted market sentiment and equities, analysts at ANZ Banking Group said on Friday.

“Data releases were generally solid, but weren’t in focus,” the bank said. 

The S&P 500 index staged a late rally overnight to close 0.4% up, with Asian markets following suit on Friday morning.

Hong Kong’s Hang Seng index rose 1.1%, the Shanghai Composite added 1%, Japan’s Nikkei 225 rallied 1.9%, Korea’s Kospi 1.3% and Australia’s main benchmark 0.8%.

Chinese internet and gaming giant Tencent added 1.2% in Hong Kong, suggesting a strong start for major shareholder and Africa’s biggest public company, Naspers. Bloomberg reported earlier that Tencent had teamed up with BMW to develop self-driving cars in China.

But JSE-heavyweight BHP Group fell 0.2% in Australia.

This came amid pressure on commodity prices owing to “growing pessimism in the market following the release of softer US economic data”, ANZ said.

No major company results or data releases are expected locally on Friday.

The SA Reserve Bank cut interest rates by 25 basis points on Thursday afternoon, and said SA’s economy would probably grow just 0.6% in 2019.

The rate cut will not meaningfully boost economic growth, according to Peter Attard Montalto, head of capital markets research at Intellidex.

Montalto sees a 35% chance of another cut in September.

The rand remained on the front foot on Friday morning, with the local currency trading at R13.85/$, R17.36/£ and R15.59/€. 

hedleyn@businesslive.co.za