Share

Equities close higher as SARB unexpectedly cuts interest rates

Cape Town - The South African Reserve Bank unexpectedly cut rates by 25 basis points for the first time in 5 years in a move that caught most analysts by surprise.

23 out of 25 analysts polled by Bloomberg had forecasted that the repo rate would be kept unchanged. CPI year-on-year data released on Wednesday came in lower than expected at 5.1%, which is well within the Reserve Bank’s upper target of 6%.

The key highlight from the monetary policy committee (MPC) press conference was the decrease in the short-term inflation outlook and the need for economic growth stimulus. As a result of the rate cut, the Rand weakened back above R13 to the US Dollar and when the JSE closed it was trading at R13.01/$.

The rate cut did not deter the earlier momentum on the JSE as the local bourse closed the day firmer. The JSE All-Share Index closed up 0.36%, whilst the Top-40 Index closed up 0.34%. Financial and retail stocks had a good day with stocks such as Truworths and Standard Bank gaining 4.06% and 1.15% respectively. The Financials Index managed to close up 0.66%, whilst the Industrials Index closed up 0.65%. The Resources Index closed down 0.66% as weaker commodity prices dragged down JSE listed miners.

The US dollar slid further after the European Central Bank’s press conference. Mario Draghi indicated that the bank was looking to change its position on its asset purchase programme. This was after the ECB kept rates unchanged at 0.00% sending most European equities lower. The Euro broke above 1.16 to the US dollar as the carnage on the greenback ensued.

Gold gained considerable momentum towards the close of the JSE mainly as a result of US Dollar weakness. There was more weakness in the US Dollar after Bloomberg reported that the special investigations team at the FBI, would investigate Trump’s business ties with Russia alongside its investigations into the election hacking allegations. Gold managed to reach an intra-day high of $1247.44 per ounce, and when the JSE closed it was trading at $1246.06 per ounce.

Palladium traded weaker and failed to gain any positive momentum despite the weaker US dollar. It managed to reach an intra-day low of $838.02 per ounce, and when the JSE closed it was trading at $849.02 per ounce. Platinum was trading in the green and it managed to reach an intra-day high of $927.19 per ounce. When the JSE closed it was trading at $925.76 per ounce.

Brent Crude briefly broke above $50 per barrel in the day’s session. US Crude Inventories recorded a larger draw than expected on Wednesday and the commodity was trading in the green for most of the day. Brent Crude was trading at $49.89 per barrel at the time of writing.


SUBSCRIBE FOR FREE UPDATE: Get Fin24's top morning business news and opinions in your inbox.

Read Fin24's top stories trending on Twitter:

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
18.96
-0.3%
Rand - Pound
23.95
-0.2%
Rand - Euro
20.47
-0.0%
Rand - Aus dollar
12.36
-0.1%
Rand - Yen
0.13
-0.3%
Platinum
911.00
+1.6%
Palladium
1,012.02
+1.0%
Gold
2,213.44
+0.9%
Silver
24.79
+0.6%
Brent-ruolie
86.09
-0.2%
Top 40
68,346
+1.0%
All Share
74,536
+0.9%
Resource 10
57,251
+2.9%
Industrial 25
103,936
+0.6%
Financial 15
16,502
-0.1%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders