JSE may be under pressure on Thursday as rand approaches R17.50/$
The currency is at a record low against the dollar, even as focus turns to the Reserve Bank interest rate decision
The JSE could be in store for further losses on Thursday morning, with the rand at a record-low ahead of the Reserve Bank's interest rate decision later.
Globally, central banks are responding to the coronavirus outbreak through stimulus, but a weaker rand could push up the price of SA exports, and fuel inflation.
Investors continue to sell off riskier assets, with the tech-heavy US Nasdaq falling more than 4% on Wednesday.
Investors are hoarding cash, Oanda senior market analyst Jeffrey Halley said in a note, while yields on short-term US treasuries had fallen close to zero, even as yields on longer-term debt have risen considerably. Bond yields move inversely to bond prices.
“Unfortunately, I suspect that capitulation trade will be a multi-day one, with the end result being markets trading sideways at their lows for an extended period,” Halley said.
In morning trade on Thursday, the Shanghai Composite was down 2.14% and the Hang Seng 4.25%.
Tencent had fallen 0.96%, pointing to possible weakness for the Naspers stable.
The rand was 1.64% weaker at R17.45/$, having earlier fallen to as much as R17.49. The local currency has now lost almost a quarter of its value so far in 2020.
Gold was 1.37% weaker at $1,465.69/oz while platinum had lost 1.36% to $611.25. Brent crude was flat at $25.30 a barrel, having fallen 12% on Wednesday.
Locally, all eyes will be on the Reserve Bank, which is expected to follow its global counterparts in cutting interest rates.
The Bank is likely to implement a 50 basis point cut to assist the economy in the wake of the coronavirus outbreak, Peregrine Treasury Solutions treasury partner Bianca Botes said in a note.
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