Stocks fell Thursday after the Federal Reserve outlined plans to pare its balance sheet by more than $1 trillion a year while hiking interest rates, a campaign to curb inflation that could hit economic growth.
The Fed’s plan to prune its near $9 trillion balance sheet, which was swollen by pandemic-era bond purchases, points to more volatility in global markets. Investors are doubtful the Fed can avoid tipping the world’s biggest economy into a recession as it focuses on slowing activity to bring down price pressures.
Meanwhile, Russia slipped closer to a technical default after foreign banks declined to process about $650 million of dollar payments on its bonds, forcing it to offer rubles instead. The euro hit a one-month dollar low ahead of the release due Wednesday of the minutes from the Fed's latest policy meeting.
"Investor confidence might have improved from the low point in early March when the Ukraine war was unfolding," said AJ Bell investment director Russ Mould. Fed governor Lael Brainard, who is considered a dove, on Tuesday spooked traders by saying bringing US inflation down from 40-year highs was of"paramount importance" and that the bank was"prepared to take stronger action" if warranted.
Crude futures had slid the previous day on the European Union's decision not to include Russian oil in a fresh round of sanctions. In a trading update for the year ended 27 February 2022, the retailer said its group sales grew by 5.2% to R97.9 billion.This is despite the impact of the civil unrest in July 2021, which cost the retailer around R1.8 billion.Sovereign credit ratings agency Moody's kept its rating of Eskom at Caa1 with a negative outlook.Moody's upgraded South Africa's outlook last week, and on Wednesday upgraded the outlooks of major banks and insurers.
"These strengths are balanced against sales revenue constraints as a result of subdued forecast GDP growth of only about 1.5% in 2022 and in 2023 for South Africa where high unemployment and inflation are hurting household finances. There is still some remaining uncertainty around future level of COVID-19 related mortality claims given the relatively low vaccination rate in the country."
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