The JSE closed weaker on Monday, while its global peers were mixed as investors await key central bank policy decisions while keeping an eye on elevated inflation and the potential impact of the Omicron coronavirus variant on the economic recovery.
The US Federal Reserve on Wednesday is expected to speed up stimulus withdrawal and perhaps open the door to earlier interest rate hikes in 2022 if inflation persists near a four-decade peak. The expectation is for the Fed to quicken the pace of taper from $15bn to $30bn.
The European Central Bank is also due to announce its policy decision on Thursday and it may give guidance on plans to end its pandemic-induced asset-purchase programme.
Markets will also be watching the monetary policy meetings of the Bank of England (BoE) and the Bank of Japan. The BoE is expected to keep rates unchanged as it waits to assess the impact of the Omicron variant on the economy.
Uncertainty over Omicron remains. While the spread of the virus is very fast, markets continue to take solace in evidence that it doesn’t appear to be causing severe disease.
“This week we have a plethora of central bank decisions, the highlight of which will obviously be the US Fed on Wednesday. The US Fed meeting has perhaps the highest potential for increasing short-term market volatility,” said IG senior analyst Shaun Murison.
“Inflation in the world’s largest economy has prompted Fed chair Jerome Powell to suggest that the end of US stimulus could come sooner than initially expected. There is also the suggestion that rates in the US are likely to rise in the first half of 2022 rather than in 2023 as previously guided,” said Murison.
The JSE all share lost 0.36% to 71,429.88 points and the top 40 0.33%. Banks fell 0.87%, precious metals 0.82%, financials 0.78%, retailers 0.37% and industrials 0.31%. Industrial metals and mining added 0.37%.
At 6.20pm, the Dow Jones industrial average was 0.93% weaker at 35,636 points. In Europe, London’s FTSE 100 and France’s CAC 40 had both lost 0.8%, while Germany’s DAX was little changed.
The rand held steady below R16 against the dollar on the day, reaching an intraday best of R15.8614/$. At 5.45pm, it was little changed at R15.9888/$ and R21.1852/£, while it had strengthened 0.12% to R18.0475/€. The euro was 0.21% weaker at $1.1287.
Gold gained 0.22% to $1,787.09/oz, while platinum lost 1.06% to $935.50. Brent crude rose 1.57% to $75.18 a barrel.
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