The local bourse closed 0.73% higher after the South African Reserve Bank (SARB) hiked rates by 50 basis points (bps), pushing the repo rate 8.25%. The SARB also updated its inflation projections, raising the forecasted average inflation rate for 2023 from 6% to 6.20%. Inflation is anticipated to average 5.10% in 2024, up from the previous forecast of 4.90%. Furthermore, the SARB revised its 2023 GDP forecast; it now expects economic growth at 0.30%, up slightly from the earlier expectation of 0.20%. The rand weakened to R19.79 against the dollar at 22h50 local time.
European markets closed down on Thursday, after data showed that Germany, the largest economy in Europe entered a technical recession. "Germany's economy contracted by 0.30% during the first quarter of 2023, as revised from the initial estimate of no growth. This revised figure indicated a second consecutive quarter of economic decline, plunging Europe's largest economy into a recession, due to persistent high price increases and a surge in borrowing costs,” added Trading Economics.
A warning from Fitch Ratings that it could place the world's largest economy on watch for a potential downgrade if lawmakers struggle to raise the US debt ceiling, placed pressure on the Hang Seng, causing it to close at its lowest close since last December. Meanwhile, the Nikkei gained 0.39% in mixed trading on Thursday. Gains in technology companies partially offset losses in other sectors.
Wall Street was mixed at 23h20 as investors brushed aside their debt ceiling concerns and welcomed Nvidia's (NASDAQ:NVDA) quarterly earnings. Nvidia's share soared 26% after its results showed that its revenue beat expectations and after the firm announced a stronger-than-expected revenue projection driven by demand for AI chips.
The price of Brent crude dropped close to 4% on Thursday, trading around $75 a barrel at 23h00 due to subsiding worries about more OPEC+ output cuts. “Early this week, Saudi Arabia’s energy minister warned short sellers to “watch out” for potential consequences, raising speculations that OPEC+ could consider further output cuts at a meeting on 4 June,” Trading Economics stated.
