JSE firms as Fed prepares minutes

The JSE tracked global markets higher on Wednesday after Evergrande Group said it will pay interest due on Thursday to bondholders in China, easing concerns that the Chinese property developer could default on billions of dollars in debt.

Investors were also waiting for the scheduled release of the Federal open market committee’s minutes later on Wednesday for insights about the US Federal Reserve’s plans on tapering its expansionary monetary policy and the prospects for subsequent increases in interest rates.

The JSE all share jumped 1.59% to 63,353.05 points its best one-day gain since July and the top 40 surged 1.52%. Retailers soared 2.72%, precious metals 2.33%, listed property 2.16%, financials 2.11% and resources 2.04%.

“Federal open market committee day finally arrives with markets already being affected by a variety of inputs,” said Oanda senior market analyst Jeffrey Halley. “Though I expect the committee to not give too much away on the tapering front, the best we can expect, I believe, is a signal that they will make a firm decision on whether to start [easing stimulus] at the November meeting,” he added.

“We could be in for a surprise on the latest dot plot. The dot plot, which charts Federal open market committee members’ timelines for rate hikes or cuts, could see more members moving hiking expectations into 2022,” Halley said.

The Dow Jones industrial average was 1.28% stronger at 34,353.20 points at 6.17pm, while the broader S&P 500 added 1.12%

The liquidity crisis at Evergrande and investor anxiety about China’s real-estate sector rippled through markets on Monday, as the threat of further regulatory intervention in that country grew. “The Evergrande coupon payment story is likely to only be a temporary reprieve with no signals from the Chinese government over what steps, if any, it will take to assist an orderly wind-down or restructuring,” said Halley.

The rand staged a modest recovery on the day and at 5.17pm was 0.76% stronger at R14.7243/$, 0.75% firmer at R17.2799/€ and up 0.77% to R20.09985/£. The euro was flat at $1.1735. Gold gained 0.22% to $1,777.34/oz. Platinum jumped 5.21% to $1,004.72/oz — reaching its highest level in three weeks. Brent crude was 1.02% firmer at $75.40 a barrel.