MARKET WRAP: JSE gives up most gains, yet ends higher in volatile trade

The JSE surrendered most of its gains on Tuesday but managed to halt a five-session slide that dragged the all-share index to a two-week low.

The all share recovered 0.19% to settle at 66,602.84, after earlier gaining as much as 1.45%.

Big industrial stocks did the heavy lifting in holding the market together despite a broadly weaker session in Europe.

SA banks held up nicely, but gold stocks extended their losing run on account of a weaker gold price, which was in turn pressured by expectations of aggressive interest-rates rises in the US.

A fair deal of bargain hunting was apparent in some of the recently sold-down local shares, with Cashbuild recovering 3.88% to R212.83 and WBHO gaining 4.57% to R76.73.

Discovery Holdings was up 2.36% to R109.45 while Tiger Brands regained 2.82% to R163.21.

“There is a breathless line-up of central bank decisions that will keep us spellbound in the days to come,” said Nick Kunze, portfolio manager at Sanlam Private Wealth.

“And I think there’s a big fear that interest rates will have to run much hotter. Sweden just shocked the market with a 100 basis points rise this morning.”

The US Federal Reserve will be the focal point for investors with its federal open market committee widely expected to hike interest rates by 75 basis points, and perhaps even a full percentage point at their two-day meeting that ends on Wednesday.

Concern about inflation and interest rates in the US in particular have held global markets hostage for months, with the Fed and other central banks in developed economies now tightening aggressively after initially saying high inflation would be temporary.

The rand was little changed against the dollar in late trade but remained significantly weaker on a trend basis. 

Tilmann Kolb, an analyst at UBS Global Wealth Management, said the rand was bearing the brunt of China’s strict measures to contain the coronavirus, as well as the Fed’s aggressive hiking cycle.

The rand was 0.26% softer at R17.71/$ in late trade, having weakened 11% since the start of the year.

“Unfortunately for the rand, these pressures are unlikely to wane in coming months. The Fed has to prove its inflation-fighting credentials and seems willing to incur economic costs in the process, and China’s recovery is likely to be postponed into the first half of next year,” said Kolb.

The gold price was down 0.71% at $1,663.50/oz, the lowest level since the early days of the pandemic in April 2020.

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Updated: September 20 2022
This article has been updated to reflect that the all-share index was at a two-week low