JSE firms as investors eye central bank policy decisions

The JSE was on track to break a three-day losing streak on Thursday morning, firming along with its global peers as the focus remained on inflation and the response of central banks. 

The procession of central banks hiking rates in an attempt to see off inflation has continued over the past 24 hours.

Two central banks — the Bank of China (BoC) and the Reserve Bank of New Zealand (RBNZ) — raised interest rates 50 basis points on Wednesday. The US Fed is expected to follow that with a similar move in a couple of weeks’ time.

“The moves from the RBNZ and BoC were not surprising, although the consensus for the former was 25 basis points. But they do support the view that more needs to be done now from central banks to avert the need for more later,” said Oanda senior market analyst Jeffrey Halley.

The European Central Bank (ECB) will announce its policy decision later on Thursday, where it is expected to maintain its speedier withdrawal of stimulus as it prioritises fighting inflation while dealing with growing risks to the continent’s economy from the war. 

The governing council will probably hold off on major decisions when it wraps up a meeting in Frankfurt on Thursday.

“The ECB’s position is complicated by being on the frontlines of the economic war on Russia. As such, I expect them to leave policy rates unchanged but reiterate the scheduled reduction of the Asset Purchase Programme (APP),” said Halley.

“It will all be about the statement and the press conference and whether the ECB signals that supporting the economy through the Ukraine conflict takes priority over rising inflation pressures, or whether the stage is being set for rate hikes later this year.”

At 9.30am, the JSE all share had gained 0.63% to 73,587.99 points and the top 40 0.74%. Industrial metals had risen 1.44%, the industrials index 1.18% and resources 0.68%.

At the same time, London’s FTSE had lost 0.26%, while France’s CAC 40 had gained 0.45% and Germany’s DAX 0.25%.

Earlier in Asia, the Shanghai Composite gained 1.22%, Hong Kong’s Hang Seng 0.58% and Japan’s Nikkei 1.22%. 

At 8.55am, the rand had weakened 0.31% to R14.5826/$, 0.61% to R15.9164/€ and 0.55% to R19.1642/£. The euro was 0.22% firmer at $1.0915.

In morning trade, the yield on the R2030 rose five basis points to 9.76%. Bond yields move inversely to prices.

Gold was 0.27% weaker at $1,972.54/oz and platinum 0.25% at  $988.5. Brent crude fell 1.1% to $107.08 a barrel.

tsobol@businesslive.co.za