JSE set for a mixed start on Thursday as industrial firms, Liberty report

Federal Reserve chair Jerome Powell. Picture: NICHOLAS KAMM/AFP
Federal Reserve chair Jerome Powell. Picture: NICHOLAS KAMM/AFP

SA stocks could open mixed on Thursday following an interest rate cut in the US, with JSE-listed industrial firms and Liberty due to report.

US markets closed lower overnight after the Federal Reserve cut interest rates by 25 basis points, as expected. But the central bank’s chair, Jerome Powell, dashed hopes for a long series of rate reductions — a stance that hurt equities, boosted the dollar and irked US President Donald Trump, who favours lower rates.

However, Powell responded to a question by saying, “I didn’t say it’s just one cut”.

Meanwhile, US-China trade talks ended on Wednesday with no sign of a breakthrough.

Hong Kong’s Hang Seng Index was 0.7% down on Thursday amid pro-democracy protests in the Chinese special administrative region.

The Shanghai Composite fell 0.8% and Japan’s Nikkei 225 shed 0.2%.

Korea’s Kospi was flat, while Australia’s main benchmark edged 0.3% lower.

WeChat owner Tencent, which influences the JSE via major shareholder Naspers, was 0.7% up in Hong Kong.

But JSE heavyweight BHP Group slumped 1% in Australia as commodity prices fell.

A number of financial reports are due locally on Thursday, including from British American Tobacco, Arcelormittal SA, Mondi, Sappi, Vivo Energy and Liberty.

Mondi said recently its half-year basic headline earnings per share rose between 9% and 16%.

Arcelormittal SA warned that it will swing to a headline loss per share of between 53c and 63c, partly because of high electricity, rail, port and primary raw material costs.

Liberty said its half-year normalised headline earnings per ordinary share increased by between 45% and 55%.

Meanwhile, the Absa Purchasing Managers’ Index (PMI) is due on Thursday. Stats SA will also publish manufacturing data, alongside electricity figures.

The rand was weaker against the dollar on Thursday morning following Powell’s comments, but slightly firmer versus other major currencies. The local unit was trading at R14.35/$, R17.40/£ and R15.86/€.

The US dollar has fallen in the early stages of every Federal Reserve easing cycle since 1984, with the exception of 1995, said Ray Attrill, head of foreign exchange strategy at National Australia Bank.

That year was the only other time the central bank has implemented “mid-cycle ‘insurance’ easing — just as this one is so far being portrayed by Mr Powell”.