SARAH BULLEN, Johannesburg | Wednesday 5.30pm.
THE long-awaited cut in interest rates by the United States Federal Reserve on Tuesday night failed to inspire the local market on Wednesday, despite global markets’ positive response to the move.
The all share index closed 0,58% lower, led down by the financial index which shed 1,47% on the day. Dealers said the market was incredibly lacklustre, totally discounting the Fed rate cut, which it has long foreseen. Even a further 4 basis point cut in the repo rate failed to rally the market.
Commenting on the slack day, marked by thin volume of trade with only R833-million changing hands, dealers said that the market is starved of news to give it a push in either direction at the moment, and the incremental falls in the repo rate will not provide the stimulus for any movement.
The Johannesburg Stock Exchange closely follows Wall Street’s S&P Futures and largely trades on expectations of the Dow Jones Industrial Average’s actions in the evening, dealers said. There is a strong feeling in the markets that the Dow, which has rocketed almost 20% in the past few months, is due for some profit-taking and is fairly vulnerable right now.
Asian markets had a good day, with Tokyo’s Nikkei 225 Index climbing just under 2% while Hong Kong’s Hang Seng Index hung on to its gains, closing 0,54% higher. European markets were also showing good form, with London’s FTSE 100 and Frankfurt’s DAX trading in positive territory.
Only the all gold index closed the day in positive territory, gaining 2,36% on a firmer gold price. Bonds closely followed Wall Street’s S&P Futures, firming in early morning trade to a high of 16,09% before falling when the futures turned. At 4.30pm the R150 had settled at a 16,29% yield, just off Tuesday’s close of 16,25%. The rand barely moved and was trading around R5,67 to the dollar at 4.30pm.
18