JSE likely to take a breather after reaching record highs

The JSE will likely take a breather on Thursday, after six straight days of relatively strong gains that pushed the all share index to record highs.

Equity markets were also weaker in Asia, where Hong Kong’s Hang Seng index shed 1.35% and Japan’s Nikkei 225 index 0.77%.

The rand showed signs of stability against the dollar at R15.46/$ in early trade, a day after sinking to its lowest level in 10 months, fuelling speculation that the Reserve Bank might raise interest rates when its monetary policy committee wraps up its scheduled policy meeting on Thursday afternoon.

The central bank’s meeting comes against a backdrop of rising  concern about signs of runaway global inflation that is exerting pressure on central banks to tighten policy.

In SA, consumer inflation, as measured by the annual change in the consumer price index, was unchanged at 5% in October, in line with the median estimate of economists surveyed by Bloomberg.

UBS Global Wealth Management emerging market currency analyst Tilmann Kolb expects the Bank to increase rates by 25 basis points to 3.75% to account for inflation risks.

“That said, inflation is far more well-behaved at the moment in SA compared to peers, so we don’t foresee as steep a hiking cycle in SA,” he said.

Elsewhere, the spot price of Brent crude slipped 0.27% to $79.98, its lowest level since early October. 

mahlangua@businesslive.co.za