JSE firmer boosted by gold prices

The local stock market edged higher on Wednesday, boosted by rising gold prices which hit new records amid growing uncertainty over US tariffs and a weaker dollar. By 21h20, the rand had strengthened by around 1%, trading at R18.83 to the dollar. The FTSE/JSE All Share Index (ALSI) rose 0.20% as local investors remained focused on the country's ongoing budget standoff, particularly tensions between the two largest parties in South Africa's Government of National Unity (GNU) over the proposed value-added tax (VAT) increase set for 1 May 2025.

In the US, markets tumbled sharply on Wednesday afternoon after Federal Reserve Chair Jerome Powell warned that potential tariffs could complicate efforts to manage inflation and support economic growth. His comments, coupled with a significant sell-off in chipmakers, rattled investor confidence. The S&P 500 slid 2.70%, the Dow Jones dropped over 700 points, and the Nasdaq fell 3.80%. Nvidia's shares plunged over 9% following a $5.5 billion charge linked to new US export restrictions on its H20 chips bound for China. Powell emphasised a cautious approach, noting the need for more clarity before the Fed makes any policy decisions.

European markets pared earlier losses but still closed in negative territory, weighed down by underwhelming corporate earnings and ongoing concerns that US tariffs may stunt global economic growth. The Eurozone’s STOXX 50 finished just below flat at 4 967, while the broader STOXX 600 declined 0.20% to 507.

Asian markets also took a hit. Japan’s Nikkei fell 1.01% to 33 920, ending a two-day winning streak as Wall Street’s slump and tariff fears soured sentiment, despite improved domestic manufacturing confidence. Hong Kong’s Hang Seng Index dropped 1.90%, breaking a six-day rally as US futures declined and analysts revised China’s 2024 growth forecast downward due to tariff threats. Notably, China’s economy grew 5.40% y/y in Q1, beating expectations and maintaining momentum into the second quarter.

Oil prices rebounded, with Brent crude rising to $65 a barrel amid renewed hopes for US-China trade negotiations. China expressed willingness to talk but called for more respectful dialogue and a clearly endorsed negotiator from the US side. This optimism helped lift oil prices despite weak supply-demand fundamentals. Meanwhile, gold continued its record-breaking rally, surpassing $3 310 an ounce as investors sought safe-haven assets in light of uncertain US trade policies and weakening demand for both the US dollar and Treasury securities.