Wall Street rallies on rate-cut hopes, rand holds near R16/$

Global markets traded on a risk-on footing overnight as comments from a senior US Federal Reserve official eased expectations for a September rate hike, lifting Wall Street and supporting gold, while the rand held steady against the dollar ahead of South Africa’s September fuel-price increases.

US stocks closed sharply higher on Thursday, with all three major benchmarks extending their rebound after a shaky start to the week. The S&P 500 added 81.11 points, or 1.06%, to 7,747.71, while the Nasdaq Composite jumped 1.4% to 26,584.06 and the Dow Jones Industrial Average advanced 624.16 points, or 1.18%, to 53,686.11.chosun+2

The rally followed remarks from Federal Reserve Governor Christopher Waller, who said he would be inclined to keep interest rates unchanged at the central bank’s 15–16 September meeting if inflation continues to cool, but would consider a hike if upcoming data show price pressures accelerating.

“My decision on the appropriate stance of policy will be heavily influenced by what we learn about August inflation,” Waller told a Reuters event in Washington, adding that he was willing to “support holding the policy rate at its current level” if there is continued progress toward the Fed’s 2% goal.

He warned, however, that “if inflation comes in hot, I would consider a rate hike”, noting that the current 3.50%–3.75% policy rate is “only slightly restricting aggregate demand”.

Treasury yields fell on the comments, with traders dialling back the odds of a September hike to around 50%, down from about 63% a day earlier, in a move that supported both equities and bullion.

Gold prices held near $4,500 an ounce on Thursday after rising almost 2% overnight, as softer US yields and reduced Fed hike expectations boosted the metal’s appeal. At 04:46 ET (08:46 GMT) on Friday, spot gold was little changed at $4,477.61 an ounce, while gold futures traded around $4,524.

Oil prices remained elevated, on track for a strong weekly gain amid ongoing Middle East tensions and concerns over key shipping routes, underpinning energy-linked commodities and feeding into fuel costs in import-dependent markets.

In South Africa, the rand was little changed against the dollar, trading around R16.00/$, after a 1.19% decline over the past week, as investors weighed the local outlook against the firmer global risk tone.

Attention at home remains on the South African Reserve Bank’s upcoming rate decision, with inflation having fallen to 4.3% in July from 5% in June, aided by softer fuel costs earlier in the year. Analysts view the SARB’s September move as finely balanced, with a hold or a small hike both possible.

Motorists, however, face immediate pressure at the pumps. From 2 September, petrol prices increased by R1.34 per litre for both 93- and 95-octane, while diesel rose by between R2.94/l and R3.15/l, pushing the inland price of 0.05% sulphur diesel to about R30.05/l.

The increases reflect sustained international oil-price strength driven by Middle East tensions, which have kept crude and refined product prices elevated despite some easing in local inflation readings.

SOURCES: Reuters, CNBC, Trading Economics, Investing.com, The South African, TopAuto.