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Johannesburg - The US Federal Reserve’s decision to taper its monetary stimulus a further $10bn per month‚ citing a continued improvement in the US economy, forced financial markets lower on Thursday morning.
The JSE traded initially weaker after the American and Asian markets closed lower in reaction to the Federal Reserve’s decision, but by midday the local market recovered some of the losses. At midday the All-share index was down 0.25% at 45‚449‚ with the Top 40 index losing only 0.09%.
The market was also still uncertain after Wednesday’s surprise decision by the South African Reserve Bank’s monetary policy committee to raise interest rates by 50 points. The market dropped sharply on Wednesday afternoon after the announcement.
The Fed’s decision to cut its bond-buying programme further was not a surprise‚ but some investors said they had hoped newly-elected chairperson Janet Yellen would adopt a dovish attitude towards emerging markets, which have been hit by reduced global liquidity in the wake of the Fed’s tapering decision.
The withdrawal from emerging markets has led to moves to tighten monetary policy in some of those markets - including South Africa - to try and curb volatility in currency markets.
Wednesday’s rate hike by the Reserve Bank however failed to stop the rand slide, and the currency was at a new five-year low of R11.39 to the dollar.
The currency was dealt another blow on Thursday morning when union Amcu rejected the platinum miners’ offer of a 9% wage hike, ensuring a further week of industrial action.
Expectations are that the rand will remain vulnerable as the capital flight from emerging markets continues, with negative effects on inflation which can lead to further rate hikes.
The financial and industrial indices were down at midday, but the weak rand is still supporting the resources index which was 1.17% higher at midday. Anglo American, which surprised the market on Wednesday with a better than expected production report, is still one of the star performers and traded 1.61% higher R261,50.
The gold sector was 2.46% higher after the news that the Labour Court has ruled that Amcu cannot go on its planned gold mine strike, and that it has ordered the union to ensure its members are informed of this. Harmony closed at R90 or 2.79% higher at R3 320.
South Africa's two major mobile operators, MTN and Vodacom, were under pressure on Wednesday after communications regulator Icasa said it would cut some of the fees they can charge their rivals.
The slide in their share prices continued on Thursday morning, but MTN recovered sharply and at midday was trading 1.25% higher at R198.95. Vodacom was however further down at R115.79 - 0.99% lower than Wednesday.
- Fin24
The JSE traded initially weaker after the American and Asian markets closed lower in reaction to the Federal Reserve’s decision, but by midday the local market recovered some of the losses. At midday the All-share index was down 0.25% at 45‚449‚ with the Top 40 index losing only 0.09%.
The market was also still uncertain after Wednesday’s surprise decision by the South African Reserve Bank’s monetary policy committee to raise interest rates by 50 points. The market dropped sharply on Wednesday afternoon after the announcement.
The Fed’s decision to cut its bond-buying programme further was not a surprise‚ but some investors said they had hoped newly-elected chairperson Janet Yellen would adopt a dovish attitude towards emerging markets, which have been hit by reduced global liquidity in the wake of the Fed’s tapering decision.
The withdrawal from emerging markets has led to moves to tighten monetary policy in some of those markets - including South Africa - to try and curb volatility in currency markets.
Wednesday’s rate hike by the Reserve Bank however failed to stop the rand slide, and the currency was at a new five-year low of R11.39 to the dollar.
The currency was dealt another blow on Thursday morning when union Amcu rejected the platinum miners’ offer of a 9% wage hike, ensuring a further week of industrial action.
Expectations are that the rand will remain vulnerable as the capital flight from emerging markets continues, with negative effects on inflation which can lead to further rate hikes.
The financial and industrial indices were down at midday, but the weak rand is still supporting the resources index which was 1.17% higher at midday. Anglo American, which surprised the market on Wednesday with a better than expected production report, is still one of the star performers and traded 1.61% higher R261,50.
The gold sector was 2.46% higher after the news that the Labour Court has ruled that Amcu cannot go on its planned gold mine strike, and that it has ordered the union to ensure its members are informed of this. Harmony closed at R90 or 2.79% higher at R3 320.
South Africa's two major mobile operators, MTN and Vodacom, were under pressure on Wednesday after communications regulator Icasa said it would cut some of the fees they can charge their rivals.
The slide in their share prices continued on Thursday morning, but MTN recovered sharply and at midday was trading 1.25% higher at R198.95. Vodacom was however further down at R115.79 - 0.99% lower than Wednesday.
- Fin24
