Werner Erasmus MACHT Capital 2014-03-20 17:03:18 The rand slipped to a seven-day intraday low on Thursday due to a broad-based dollar strength following the hawkish commentary from the US central bank last night. “The dollar is attracting portfolio flows to the detriment of other major currencies after the surprisingly hawkish tone from the US Fed chair‚” Bidvest Bank chief currency dealer Ion de Vleeschauwer said. The US central bank tapered its monetary stimulus by a further $10bn last night‚ as expected‚ bringing the monthly bond buying programme to $55bn. This is the third time it has reduced its asset-purchase programme from the initial $85bn. At 3.59pm‚ the rand was at R10.9370 to the dollar from Wednesday’s close of R10.8666. Against the euro‚ the rand was at R15.0510 from its previous close of R15.0198 and was at R18.0338 to the pound from R17.9656 on Wednesday. The euro was at $1.3763 from a previous close of $1.3817. Absa Capital said Wednesday’s price action served as a reminder of how vulnerable the rand still was to the prospect of tighter US monetary policy due to South Africa’s large external funding requirements. The JSE was flat at midday on Thursday‚ taking its cue from global markets - notably a weaker Wall Street - after US Federal Reserve chairwoman Janet Yellen pulled the rate-hike cycle forward. At 12:00pm the UK FTSE 100 index was 0.77% down‚ the Paris CAC 40 was 0.54% down and the Hang Seng Index closed 1.81% lower. On Wednesday‚ Ms Yellen indicated that interest rates could rise sooner than expected‚ which boosted the dollar‚ but sent Wall Street tumbling. The Federal open market committee (FOMC) also cut its monetary stimulus by a further $10bn to $55bn a month‚ as was expected. At 12:00pm‚ the JSE all share index was 0.05% lower at 46‚643.82 points‚ with the blue-chip top 40 flat. Gold miners and bank counters led the decliners shedding 2.13% and 0.27% respectively. Barclays Research analysts said in a note that the FOMC had shifted away from thresholds to qualitative guidance after Wednesday’s meeting. “However‚ in a somewhat surprising move‚ it quickened the expected pace of its rate-hike cycle. The median forecast of the Fed funds rate rose 25 basis points to 1.0% at the end of 2015 and 50 basis points to 2.25% at the end of 2016‚” Barclays said. Among individual shares on the JSE‚ gold miner Anglo Gold Ashanti (ANG) was down 2.43% at R195.29 and rival Harmony (HAR) declined 3.60% to R35.57. The banking and financials sector had trended lower‚ with Capitec (CPI) losing the most at 2.03% to R185.65. The bank was closely followed by RMB Holdings (RMH) which lost 1.37% to R45.44. Pharmaceutical company Adcock Ingram (AIP) was down 2.21% to R55.75. Adcock and its erstwhile suitor CFR Pharmaceuticals have initiated new discussions to reconsider the “synergies” they identified last year when they wanted to merge‚ the newly appointed chairman of the South African firm‚ Brian Joffe‚ said on Wednesday. Media Groups Naspers and Caxton were both up at 2.15% and 4.04% respectively. Naspers shares were trading at R1‚185 while Caxton shares were at R16.49. Insurer Sanlam (SLM) lost 1.01% to R52.99‚ and building company Basil Read (BSR) surged 6.59% to R8.74 after a positive trading update.
Posted on: Thu, 20 Mar 2014 15:03:43 +0000
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