Rand pauses for rally, stocks plunge as investors eye Fed



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At 1520 GMT, the rand was 0.12% weaker at 14.5250 per dollar after a close of 14.5075 overnight, losing some momentum after posting a two-week high of 14.4700 at the start of the day .

Image: EWN.

JOHANNESBURG (Reuters) – The margin fell at the end of the trading session on Wednesday, with investors making profits from a strong recovery in the previous session, ahead of a policy decision by the US Federal Reserve.

At 1520 GMT, the rand was 0.12% weaker at 14.5250 per dollar after a close of 14.5075 overnight, losing some momentum after posting a two-week high of 14.4700 at the start of the day .

A promise by President Cyril Ramaphosa on Tuesday to give more support to Eskom's energy utility, combined with an increasingly dovic outlook of the US and euro-zone central banks, posted the biggest gain in a single session since 4 January.

Ramaphosa is expected to give details of Eskom's support in his state of the nation address on Thursday as pressure builds on him to fulfill his electoral promise to spur growth and prevent the loss of the country's investment grade credit rating . The investor hopes that the US Federal Reserve will soon cut rates and that home inflation data will be adjusted to maintain demand for the healthy population.

"If a 25bp cut materializes in the US-Fed rate of funds tonight, the rand would have substantial scope for imminent force," said Annabel Bishop, chief economist at Investec.

"A less dovish view of what markets anticipate could instead see a renewed weakness of the rand," Bishop added in a note.

Bonds were firmer, with benchmark paper yield falling due in 2026 to drop 7 basis points to 8.18%, the best since April 2018.

Stocks weakened as the Top-40 index of the Johannesburg Stock Exchange (JSE) fell 0.11% to 52,534 points, while the broader All-Share Index closed down 0.13% at 58,553 .

"I think the buy slowed down a bit because people are talking:" Okay, we made our purchase we need to make, let's wait for the Fed before we continue to buy the local stock, "the stock trader Cratos Capital. Greg Davies.

British American Tobacco tobacco company was one of the worst performers of the blue-chip index, dropping 2.14%, while retailer Mr Price fell 1.79%.

Scandal-Steinhoff saw its listed shares fall nearly 9 percent after the company reported an annual loss of $ 1.3 billion and warned that the major accounting scandal it faces would likely cause further damage to operations.

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