Metals help cushion JSE

Metals gains spared the JSE from a bigger drop on Thursday, with European bourses down more than 1.5% in intraday trading as the mood remained sombre. The all share closed 0.85% weaker, while precious metals jumped 3.7%. The rand remained around R18 to the dollar, weakening along with other emergingmarket currencies.

Metals gains spared the JSE from a bigger drop on Thursday, with European bourses down more than 1.5% in intraday trading as the mood remained sombre.

The rally, which saw the JSE off the one-year low reached in the previous session after the announcement by the Bank of Europe (BOE), fizzled out as risk-off sentiment returned to the markets.

UK Prime Minister Liz Truss defended the country’s historically large tax cut package, describing it as the “right plan”. This is despite the IMF criticising the UK government’s budget plans in last week’s mini-budget. Truss said on Thursday that she was sticking with her plan for huge UK tax cuts and blamed Russia’s war in Ukraine for the market fallout since the fiscal package was announced last week.

“For now, it’s a tug-of-war between the BOE and the treasury,” said FXTM senior research analyst Lukman Otunuga. “It is difficult to call a firm outcome in the short term, but all parties are now acutely aware of the need for a functioning debt capital market as the inability to secure financing would be catastrophic,” said Otunuga.

Meanwhile, over in the US, a stronger-than-expected job report released on Thursday built on the notion that the Federal Reserve will stick with its aggressive monetary tightening to fight high inflation, aggravating recessionary fears.

The all share closed 0.85% weaker to 63,263 points and the top 40 fell 0.86%. Precious metals jumped 3.7%, industrial metals 3.84% and resources 3.31%. Banks fell 3.24%, financials 2.78% and industrials 2.17%.

At 6.04pm, the Dow Jones industrial average was 1.24% weaker at 29,315 points while London’s FTSE 100 had fallen 1.77%, France’s CAC 40 1.53% and Germany’s DAX 1.71%.

In the currency markets, the rand remained around R18/$, weakening along with other emerging-market currencies. It traded 0.81% weaker at R17.9713/$ by 5.55pm. However, it weakened further against the euro and the pound, falling 1.23% to R17.5720/€ and 2.2% to R19.8504/£ as “the dollar lost some ground against the two currencies”, said TreasuryONE currency strategist Andre Cilliers.

The euro was 0.47% firmer at $0.9779.

Capitec led the losses on the day, falling 10.27% to R1,615.14, the biggest one-day fall since March 2020, after the company declared a softer-thanexpected interim dividend.

Gold was little changed at $1,660.26/oz, while platinum gained 0.74% to $867.70/oz. Brent crude was 0.15% firmer at $89.34 a barrel.