MARKET WRAP: Rand weaker ahead of ANC conference, JSE follows global peers lower

The JSE closed sharply lower on Thursday in line with its global counterparts as major central banks delivered their final interest rate decisions for the year.

The rand was also weaker as a potentially fraught ANC elective conference, which gets under way on Friday, weighed on sentiment.

Andre Cilliers, strategist at TreasuryOne, said the main reasons for the rand’s weakness were local factors, citing the resignation on Wednesday of Eskom CEO Andre de Ruyter and reports that the Gauteng branch of the ANC was split between support for Cyril Ramaphosa and Zweli Mkhize as president of the governing party. 

“We are seeing some local jitters going into the long weekend and ahead of the ANC conference,” he said.

At 7.40pm the rand was 2.07% weaker at R17.5337/$ and 1.45% softer at R18.5928/€.  

After successive hikes of 75 basis points, the European Central Bank increased its deposit rate by 50 bps, while the Bank of England delivered its ninth straight rate rise, also of 50 bps.   

The ECB and BoE moves came after the US Federal Reserve raised rates by 50 bps on Wednesday. Data released on Thursday shows US November retail sales fell the most in more than a year. In addition, the labour market remains tight, with the number of Americans filing for unemployment benefits falling last week.

Craig Erlam, senior market analyst at Oanda, said global equity markets were reeling from “the nasty shock” delivered by the Fed.

“Safe to say, investors simply didn’t see that coming. Two months of better-than-expected inflation data were enough to convince them that the Fed would not only ease off the brake, but also signal it would do so more in the coming months,” he wrote in a note.

The JSE all share index ended 1.76% lower at 72,898 points, while the top 40 index shed 1.88%.

Troubled retail holding company Steinhoff recorded its biggest one-day fall ever, plummeting 64.2% to 58c after the company said it had reached an agreement with 64% of its main lenders to extend debt due in six months until 2026. The deal will leave shareholders with 20% of what they hold, while the debt holders will take over 80% of the firm.

At 6pm, the Dow Jones industrial average was down 2% as investors fretted over the Fed’s more hawkish tone. The FTSE 100 was down 0.63%, the CAC 40 2.73% and Germany’s DAX 2.94%.

Spot gold was 1.38% lower at $1,781.32, platinum shed 1.49% to $1,010.20 and Brent crude was almost 1% lower at $81.96 a barrel.

MackenzieJ@arena.co.za