Investors Eye SARB Interest Rate Decision Today

  • Market Overview

Local investors will closely watch the interest rate announcement from the South African Reserve Bank (SARB) this afternoon to see if borrowing costs will be increased by another 50 basis points (bps) as widely expected. If the SARB hikes the local repo rate to 7.50% it would be the highest borrowing cost in South Africa since June 2015. The industrial and financial sectors weighed on the local bourse on Wednesday, which closed 0.39% in the red. At 17h44 the rand continued to trade above R17 to the US dollar , while it cost R21.11 for a British pound and R18.68 for a euro .

Disappointing corporate earnings also pushed major European indices into the red on Wednesday, with Britain’s FTSE 100 down 0.52%, Germany’s DAX losing 0.33% and the French CAC40 falling 0.40%. “Shares of ASML Holding (AS: ASML ) were among the top drags on the STOXX 600 , despite reporting better-than-expected earnings, while fragrance maker Givaudan and electrical equipment maker Landis were also under pressure following results,” reported Trading Economics.

All three major US indices lost more than 1% at 17h47 on Wednesday “as disappointing earnings added to concerns about a possible recession. Microsoft (NASDAQ: MSFT ) shares dropped over 4% after the tech bellwether registered its slowest sales growth in more than six years. Boeing (NYSE: BA ) fell roughly 3% after the aircraft maker missed earnings and revenue expectations…Now, all eyes turn to Tesla (NASDAQ: TSLA ) and IBM (NYSE: IBM ), which will publish earnings after the close,” Trading Economics added. According to Reuters, Microsoft “said it was investigating a networking issue that impacted multiple services. The tech titan's better-than-expected results on Tuesday showed some strength in the face of a weak economy but limp revenue growth signalled tougher times for the sector.”

The Nikkei 225 Index continued to rise on Wednesday, closing up by 0.35% “as the Bank of Japan committed to its policy of ultra-low interest rates despite surging inflation and intense market pressure for further policy adjustment.” In the meantime, Hong Kong and Chinese markets were still closed for the Lunar New Year holidays.

The price of Brent crude fell to $85.89 a barrel at 17h50, while spot gold also retreated somewhat from previous highs, trading at $1 931.58 at the same time.

PSG Wealth Daily Investment Update, 26 January 2023

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