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An employee passes share price information displayed on an electronic ticker board inside the London Stock Exchange Group’s offices in London, the UK. Picture: BLOOMBERG VIA GETTY IMAGES/LUKE MACGREGOR
An employee passes share price information displayed on an electronic ticker board inside the London Stock Exchange Group’s offices in London, the UK. Picture: BLOOMBERG VIA GETTY IMAGES/LUKE MACGREGOR

The JSE looks set to contend with struggling Asian markets on Wednesday morning, with caution prevailing ahead of the US Federal Reserve’s policy announcement later.

The Fed is widely expected to raise rates by 50 basis points and announce the balance-sheet runoff, with surging fuel and food costs prompting a recent hawkish shift from the world’s most influential central bank. The announcement will be at 8pm SA time, well after local markets close.

The Fed knows the first few rate increases will not restrain growth much but its messaging on tightening and the size of the balance sheet runoff start could rattle markets, Oanda analyst Edward Moya said in a note.

Market volatility is expected to remain elevated over the next few meetings, he said.

Locally, load-shedding resumed on Tuesday amid further breakdowns of generating units.

In morning trade the Hang Seng was down 1.3% and South Korea’s Kospi 0.26%, while mainland Chinese and Japanese markets are closed for public holidays.

Tencent, which can give direction to the local bourse via the Naspers stable, was down 3.26%.

Gold was 0.22% weaker at $1,867.33/oz while platinum gained 0.61% to $969. Brent crude was up 0.27% to $105.97 a barrel.

The rand was 0.21% firmer at R15.75/$, having strengthened by 1.87% on Tuesday, its best day in more than a year. Other emerging-market currencies also fared well on Tuesday, with Brazil’s real gaining 2.5%, while Mexico’s peso added almost 1%.

The dollar has been on a tear recently as markets priced in higher interest rates and sought safer assets, with the dollar index, which measures the strength of the US currency against a basket of currencies, recently reaching its highest level since December 2002, TreasuryOne analyst Andre Cilliers said in a note on Tuesday.

Over the past month, the rand has still depreciated more than 6% against the dollar.

SA’s corporate and investor calendar is bare on Wednesday.

gernetzkyk@businesslive.co.za

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