JSE set for mixed start on Wednesday as monetary policy takes centre stage
Global markets are treading water ahead of the Jackson Hole symposium on Friday
The JSE all share index could open mixed on Wednesday as global markets tread water ahead of a meeting of monetary policy leaders at the end of the week.
Amid a lack of major news, markets closed lower on Tuesday, with the S&P 500 index losing 0.8%.
“The main focus this week is the meeting of monetary policy leaders at Jackson Hole on Friday,” analysts at Vestact said in a note. “Particular focus will be given to what [Federal Reserve chair] Jay Powell has to say about where he thinks the Fed will be heading.”
Powell has come under increasing pressure from US President Donald Trump to cut interest rates more aggressively to boost the economy, which is said to be at risk of a recession partly because of the trade war between the US and China.
Analysts at ANZ Banking Group said on Wednesday the market had already priced in another 25 basis point rate cut by the Fed at its next meeting in September.
“Looking ahead, markets are pricing in sizable rate cuts over the next year: 75 basis points of cuts by early next year and 100 basis points of cuts by mid-2020.”
Asian markets were mixed on Wednesday.
Hong Kong’s Hang Seng index edged up 0.1% and the Shanghai Composite was flat. Japan’s Nikkei 225 fell 0.4%, while Korea’s Kospi rose marginally. Australia’s main benchmark shed 1.1%.
Chinese Internet and gaming giant Tencent, which is 31% owned by Naspers, rose 0.6% in Hong Kong.
JSE-heavyweight BHP Group, on the other hand, fell 2.3% in Australia. The mining giant on Tuesday reported profit and dividends that fell slightly short of expectations.
Meanwhile, Stats SA is due to publish consumer inflation data for July on Wednesday morning. Analysts say a low reading would raise the prospect of another domestic interest rate cut in 2019.
Later in the day, the Federal Reserve will publish minutes from its monetary policy meeting in July. The US will also release existing home sales figures.
The rand, which has been under pressure along with other emerging-market assets, started the day slightly firmer. The local currency was trading at R15.34/$, R18.65/£ and R17.02/€.