SARAH BULLEN, Cape Town | Monday 5.30pm
THE Johannesburg Stock Exchange ended sharply weaker on Monday on worldwide dread that the Federal Reserve will on Tuesday announce increased United States interest rates.
The concerns hit world markets after the announcement last week that US consumer inflation was higher than expected, triggering speculation that interest rates are set to rise this week.
Hardest hit on Wall Street on Friday was banking stock. Following the US reaction, the JSE took its heaviest knock in financial stock, with the index losing 3,20% on the day. The industrial index was also hard hit, losing 2,14% while the gold board shed 0,78% on the day. The gold price remained fairly stable at $276,25 an ounce.
Taking its cue from the continuing deterioration of the local market, the Reserve Bank on Monday tightened liquidity to allow the repo rate to rise for the third consecutive session to 15,458%.
All of the major global markets were weaker in anticipation of the fallout a US interest rate hike would have on fragile emerging markets. Japan’s Nikkei Dow shed 2,32% while Hong Kong’s Hang Seng lost 2,08%.
Europe is down across the board going into the late afternoon trade, with London’s FTSE-100 leading the fall with a 2,03% dip. The bond market was relatively static, with the R150 losing only two basis points to a 15,09% yield. On the currency side, the rand made some gains against the dollar, fighting its way back to R6,19 by 4.30pm. At that time it was trading at R10,03 to the pound.