SOUTH African stocks were at more than a one-year high on Wednesday morning.
The JSE index edged higher on Wednesday morning, trading above 79 000 points, a level not seen since February 2023 and more than a one-year high, mainly driven by heavyweight resource-linked stocks and financials, Trading Economics said.
Traders across the globe braced for a key US inflation report that could shed more light on the timing of possible rate cuts by the Federal Reserve. On the domestic front, South Africa’s retail sales data will be published later in the day.
Meanwhile, the rand continued to hold its own against the weaker dollar.
At 12.10am the rand was 0.09% stronger against the dollar at R18.3962.
The dollar index fell below 105, sliding for the third consecutive session as investors prepared for the latest US consumer inflation report that could guide the interest rate outlook further.
Bianca Botes, a director at Citadel Global, said: “The rand held its own during trade yesterday as it maintained its recent gains and continued to trade range-bound.
“Today’s all-important US CPI data may create some volatility this afternoon as it provides fresh directional momentum to traders. A hotter-than-expected reading will likely put the rand under pressure,” she said.
Botes said the volatility of the rand (ZAR) against the dollar (USD) and other major currencies was a trend that was keeping many South Africans up at night
“How well the USD performs and how it impacts the value of the ZAR is greatly impacted by factors such as the US employment figures, inflation rates and gross domestic product (GDP) data, pronouncements by the US Federal Reserve (Fed), and locally, South Africa’s trade balance, GDP, inflation levels, unemployment figures, and guidance from the South African Reserve Bank about monetary policy.
“We are also closely watching the impact of the continuous tight monetary policy over the past two years around the world, and the anticipation of central banks moving to a looser stance,” said Botes.
According to Botes, geopolitical events and global economic trends interact with economic indicators to shape currency market dynamics in several ways. Global events seriously impact the risk appetite of investors, the movement of commodity prices, the stability of traditional trade relationships, the existing exchange rate differentials between countries, and which asset classes investors turn to as safe havens.
“Economic indicators related to economic stability, fiscal health, and monetary policy credibility become particularly important during volatile periods such as the one we are experiencing now, and these factors all influence currency market dynamic,” she explained.
Oil
Brent crude futures rose toward $83 (R1527) per barrel, recouping some losses from the previous session as wildfires in Canada threatened the country's oil sands industry which has the capacity to produce 3.3 million barrels per day, Trading Economics said.
Gold
Gold held around $2350 per ounce as investors digested fresh US PPI data while waiting for the crucial CPI figures.
BUSINESS REPORT