The South African stock market opened to the downside as investors reacted to the Federal Reserveโs interest rate decision.
While the 25-basis-point cut came out as expected and the Fedโs projections pointed to more cuts this year, the cautious tone of the Fed Chair had an impact on sentiment and could weigh on risk appetite.
A decline in gold prices also weighed on the stock market and could continue to put pressure on the mining sector if corrections persist.
As a result, stocks could see some volatility. Investors could also remain cautious ahead of the SARB’s own interest rate decision. The central bank is expected to leave interest rates on hold in a bid to push inflation toward the 3% target. At the same time, yesterdayโs CPI slowed to 3.3% YoY (-0.1% m/m) with core at 3.1%, pointing to cleaner disinflation, which could support future monetary policy easing. In the meantime, retail sales rose 5.6% YoY, signalling firmer consumer momentum.
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