JSE. Picture: MICHAEL ETTERSHANK
JSE. Picture: MICHAEL ETTERSHANK

The JSE must contend with subdued Asian markets on Thursday morning, with all eyes on the Reserve Bank interest rate decision later in the afternoon.

The consensus is that the Reserve Bank will opt to keep rates unchanged due to the threat to the rand posed by a junk status rating from Moody’s Investors Service. Some analysts do expect a cut, citing subdued inflation.

The Bank is unlikely to cut interest rates to support growth while structural reforms remain outstanding, as the impact of rate cuts would be marginal, Investec chief economist Annabel Bishop said in a note. The repo rate is thus likely to remain unchanged until Moody’s delivers its verdict on SA’s credit rating in March, she said.

Asian markets were subdued on Thursday morning, despite the US and China formalising a partial trade deal on Wednesday that includes commitments by China to increase purchases of US goods and tackle intellectual property theft.

The main benefit to the deal is that the frictions between the US and China are unlikely to worsen in the next months, said AxiTrader chief Asia markets strategist Stephen Innes in a note.

In morning trade on Thursday the Shanghai composite was down 0.28%, while Hong Kong’s Hang Seng was flat. Tencent, which influences the JSE through Naspers, its biggest shareholder, was down 0.45%.

Gold was flat at $1,555.50 an ounce while platinum was little changed at $1,018.67 an ounce.

The rand was flat at R14.37 a dollar.

Some local focus is also on mining production data for November due later, with the consensus that output remained under pressure due to weak global demand and local power cuts.

gernetzkyk@businesslive.co.za