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Rand Strengthens after Inflation Moderates

Published 2024/01/25, 08:28
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The rand extended gains from the previous session on Wednesday after data showed that South Africa’s inflation rate eased for the second consecutive month. The Consumer Price Index fell to 5.10% in December 2023 from 5.50% in November — the lowest reading in four months and better than market expectations of 5.20%. Core inflation remained steady at 4.50% in December and was lower than the 4.60% market forecast. At 18h00, the rand had strengthened 0.74% to R18.89/$, having touched an intraday best of R18.78. Similarly, the local bourse ended on a positive note, supported by gains in retailers and miners, with the All Share Index rising 1.34% and the Top 40 adding 1.39%.

Asian markets were buoyant on Wednesday after China announced measures to boost a weak recovery for the world’s second-largest economy. “The People’s Bank of China (PBoC) announced a 50 basis points cut in the amount of cash banks must hold as reserves, effective from 5 February 2024. This move will inject about $140 billion of cash into the banking system and send a strong signal of support for a fragile economy and plunging stock markets,” Reuters reported. In addition, the PBoC Governor said the bank will announce policies to improve commercial property lending this week, “giving hope to investors who have been frustrated by China's efforts to put a floor under a real estate sector that underpins consumption and household wealth,” Reuters added. The Hang Seng Index extended gains, ending the session up 3.60%, while China’s benchmark Shanghai Composite gained 1.80%.

European stock markets advanced on Wednesday driven by gains in technology stocks, following impressive earnings reports from semiconductor manufacturer ASML Holding (AS:ASML) and software company SAP. Positive sentiment was also reinforced by the new stimulus measures announced by China’s central bank.

Wall Street rose on earnings-related optimism fuelled by Netflix Inc (NASDAQ:NFLX). “Netflix shares surged more than 10% after the streamer said its total subscriber count hit an all-time high of 260.8 million. Revenue topped analysts’ estimates, as did current-quarter earnings guidance,” according to Bloomberg. The benchmark S&P 500 rose by 0.80%, clinching a new all-time closing record. The Nasdaq Composite added 0.36%, while the Dow Jones Industrial Average fell 0.26%, hurt by declines of more than 2% in Verizon (NYSE:VZ) and 3M (NYSE:MMM).

Gold eased 0.80% to $2 012.59/oz, while platinum gained 0.87% to $903.30/oz. Brent crude was 1.39% firmer at $80.45 a barrel at 19h00.

PSG Wealth Daily Investment Update, 25 January 2024

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