ALAN FINLAY & Reuters, Johannesburg | Wednesday 11.20am.
LOCAL markets slumped in early trade on Wednesday, as investors took a dim view of a US rates hike of 50 basis points, which boosted the Dow Jones overnight.
Analysts say the hike may put pressure on the rand and result in an interest rates hike in South Africa, when the Reserve Bank’s Monetary Policy Committee meets on Thursday.
By 11am the all-share was 1% or 76 points weaker, with resources suffering the worse setback, trading 1,78% or 88 points down. Industrials were 0,83% or 71 points under, while financials had dipped 0,41% or 37 points.
Gold shares were 1,74% or 17 points lower, while gold was trading at $274,15 an ounce, or $1,85 lower, on international markets.
The rand was marginally down against the dollar at R7,06 in early trade, but weakened to R7,10 after a stronger demand for the dollar was fueled by the US rates hike.
Most Asia stock markets were flat on Wednesday, reversing early gains that followed US share price rises on an optimistic view of the hike.
The hike was accompanied by a Fed statement that left the door open for further tightening, saying risks to the US economy remain tilted toward higher inflation.