JSE opens higher in anticipation of Reserve Bank keeping rates unchanged

The JSE was higher at the opening on Thursday as banks jumped on the likelihood of the Reserve Bank keeping interest rates unchanged later in the day.

Analysts said better-than-expected consumer inflation data on Wednesday might result in the Bank’s monetary policy committee (MPC) not over-reacting to the possibility of higher inflation later in the year and in 2019 due to the weaker rand and higher oil prices.

The weak economy also mitigates against a rate increase with just three of 19 economists in a Bloomberg survey predicting a rate hike. The rand has dropped more than 7% since the last MPC meeting.

The rand broke through the important resistance level of R14.60 in overnight trade on Thursday, and was at R14.4580 at the JSE’s opening. TreasuryOne analyst Andre Botha said the positive momentum of keeping rates on hold could be carried forward with the rand holding up at levels around R14.50.

“It might be too early to call for a rebound, but one gets the sense that the market is sensing some value in emerging markets again,” he said.

Brent crude was largely unchanged at $79.48 a barrel and spot gold was steady at $1,202 an ounce.

Naspers was up at 0.71% to R3,187.44 after Moody’s warned its planned MultiChoice unbundling may have adverse consequences for the group. “The loss of dividends from the video entertainment segment weakens the diversity of Naspers’ cash flow,” Moody’s said. Chinese internet company Tencent, of which Naspers owns almost a third, was up 0.62% in Hong Kong trade.

At 9.50am, the all share was 0.42% up at 56,685.30 points and the top 40 added 0.43%. Banks rose 1.3%, platinums 0.82%, industrials 0.80%, financials 0.75%, and general retailers 0.70%. Resources lost 0.78%, and food and drug retailers 0.26%.

Anglo American was down 1.05% to R316.65. British American Tobacco lost 0.74% to R679.12.

FirstRand gained 2.18% to R69.37 and Standard Bank 0.81% to R181.67. The gap between FirstRand and Standard Bank’s respective market caps have now widened to R100bn in FirstRand’s favour.

Growthpoint slipped 0.39% to R23.11.

Aspen rebounded 4.24% to R180.58.