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A mixed week

16 August 2004 Angelo Coppola

(16.8.04) This after the Reserve Bank surprised the markets by reducing the repo rate by 50 basis points.

The Nedcor Economic Unit reports that the rand softened against major currencies, closing at R6,51 against the US dollar from R6,13.

Against the euro and the pound, the local unit eased to R8,01 and R11,92 respectively from R7,55 and R11,36.

The domestic bond market rallied in response to the interest rate cut, with the yield on the longer dated R153 2010 reaching 8,98% on Thursday, before closing at 9,09% on Friday and compared with 9,30% at the end of the previous week.

The yield on the R198 2008 closed at 8,63% from 9,01%.

Money market rates also responded favourably to the rate cut, with the yields on the 3-, 6-, 9- and 12-month NCDs falling sharply to 7,45%, 8,0%, 8,15% and 8,15% respectively, from 8,15%, 8,55%, 8,60% and 8,80% a week earlier. The yield on the 3-month Jibar edged lower to 7,38% from 8,05%.

Strong gains in the key resources sector, on the back of the softer rand, pushed the overall equity market higher, with the FTSE/JSE all-share index closing 3,3% firmer over the week at 10 567,6 from the previous close of 10 227,5.

Resources gained 7,5% to end the week at 10 575,0 from 9 837,9, while the gold index was up by 8,4% to 1 824,9 from 1 682,9. Financial and industrial stocks continued to show positive growth, gaining 1,1% and 0,2% respectively to close at 9 862,6 and 8 762,4 respectively.

The Reserve Bank’s Monetary Policy Committee (MPC) decided to cut the repo rate by 50 basis points to 7,5% at its policy meeting last week, taking prime to 11,0% from 11,5%.

This was against market expectations of an unchanged policy stance following weeks of bearish statements by the governor. The decision to cut interest rates was based on the Committee’s underlying view that inflation is likely to stay within the target range over the next two years.

However, the Committee acknowledged that the recent sharp increases in international oil prices, higher domestic nominal unit labour costs, robust domestic demand and high levels of money supply growth remain a threat to the inflation outlook.

The Nedcor Economic Unit reports that the rand softened against major currencies, closing at R6,51 against the US dollar from R6,13.

Against the euro and the pound, the local unit eased to R8,01 and R11,92 respectively from R7,55 and R11,36.

The domestic bond market rallied in response to the interest rate cut, with the yield on the longer dated R153 2010 reaching 8,98% on Thursday, before closing at 9,09% on Friday and compared with 9,30% at the end of the previous week.

The yield on the R198 2008 closed at 8,63% from 9,01%.

Money market rates also responded favourably to the rate cut, with the yields on the 3-, 6-, 9- and 12-month NCDs falling sharply to 7,45%, 8,0%, 8,15% and 8,15% respectively, from 8,15%, 8,55%, 8,60% and 8,80% a week earlier. The yield on the 3-month Jibar edged lower to 7,38% from 8,05%.

Strong gains in the key resources sector, on the back of the softer rand, pushed the overall equity market higher, with the FTSE/JSE all-share index closing 3,3% firmer over the week at 10 567,6 from the previous close of 10 227,5.

Resources gained 7,5% to end the week at 10 575,0 from 9 837,9, while the gold index was up by 8,4% to 1 824,9 from 1 682,9. Financial and industrial stocks continued to show positive growth, gaining 1,1% and 0,2% respectively to close at 9 862,6 and 8 762,4 respectively.

The Reserve Bank’s Monetary Policy Committee (MPC) decided to cut the repo rate by 50 basis points to 7,5% at its policy meeting last week, taking prime to 11,0% from 11,5%.

This was against market expectations of an unchanged policy stance following weeks of bearish statements by the governor. The decision to cut interest rates was based on the Committee’s underlying view that inflation is likely to stay within the target range over the next two years.

However, the Committee acknowledged that the recent sharp increases in international oil prices, higher domestic nominal unit labour costs, robust domestic demand and high levels of money supply growth remain a threat to the inflation outlook.

The Nedcor Economic Unit reports that the rand softened against major currencies, closing at R6,51 against the US dollar from R6,13.

Against the euro and the pound, the local unit eased to R8,01 and R11,92 respectively from R7,55 and R11,36.

The domestic bond market rallied in response to the interest rate cut, with the yield on the longer dated R153 2010 reaching 8,98% on Thursday, before closing at 9,09% on Friday and compared with 9,30% at the end of the previous week.

The yield on the R198 2008 closed at 8,63% from 9,01%.

Money market rates also responded favourably to the rate cut, with the yields on the 3-, 6-, 9- and 12-month NCDs falling sharply to 7,45%, 8,0%, 8,15% and 8,15% respectively, from 8,15%, 8,55%, 8,60% and 8,80% a week earlier. The yield on the 3-month Jibar edged lower to 7,38% from 8,05%.

Strong gains in the key resources sector, on the back of the softer rand, pushed the overall equity market higher, with the FTSE/JSE all-share index closing 3,3% firmer over the week at 10 567,6 from the previous close of 10 227,5.

Resources gained 7,5% to end the week at 10 575,0 from 9 837,9, while the gold index was up by 8,4% to 1 824,9 from 1 682,9. Financial and industrial stocks continued to show positive growth, gaining 1,1% and 0,2% respectively to close at 9 862,6 and 8 762,4 respectively.

The Reserve Bank’s Monetary Policy Committee (MPC) decided to cut the repo rate by 50 basis points to 7,5% at its policy meeting last week, taking prime to 11,0% from 11,5%.

This was against market expectations of an unchanged policy stance following weeks of bearish statements by the governor. The decision to cut interest rates was based on the Committee’s underlying view that inflation is likely to stay within the target range over the next two years.

However, the Committee acknowledged that the recent sharp increases in international oil prices, higher domestic nominal unit labour costs, robust domestic demand and high levels of money supply growth remain a threat to the inflation outlook.

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