The JSE gave up afternoon gains to close weaker as US March inflation came in weaker than expected, adding to expectations of more aggressive rate hikes by the Federal Reserve.
US consumer prices rose to 8.5% on an annual basis in March, above analysts’ estimates of 8.4% and up from 7.9% a month ago. CPI climbed by 1.2% on the month.
Still, the core CPI reading, which excludes food and energy prices, slowed to 0.3% in the month from 0.5% in February. Core prices on an annual basis were up 6.5%.
The Fed hiked rates at its March meeting, and it’s expected to do announce further increases over the course of the year. Markets are pricing in 50 basis-point interest increases at each of the Fed’s next two meetings, in early May and mid June.
The JSE all share, which was down more than 1% in early trade, rebounded in the afternoon session but surrendered the gains after the US data was published. Yet the easing of core prices offered a glimmer of hope and could indicate inflation has reached as peak.
“March’s data may represent a high-water mark for inflation,” said FXTM senior research analyst Lukman Otunuga. “Although prices remain high, the main thing to take out from the inflation report is that core price pressures appear to be moderating.”
The JSE all share shed 0.84% to 73,801.88 points, led by banks which fell 2.05%, retailers 1.75% and financials 1.29%. The top 40 was down 0.93%.
At 6.09pm, the Dow Jones industrial average was 0.63% firmer at 34,522.57 points and the S&P 500 had gained 0.7%. In Europe, London’s FTSE closed 0.55% weaker, while Germany’s DAX was down 0.48% and France’s CAC 40 0.28%.
The rand firmed for the third consecutive session, reaching an intraday best of R14.4462/$. At 5.50pm, it was 0.57% at R14.4896/$, 0.79% to R15.7212/€ and 0.57% to R18.8814/£. The euro was 0.3% softer at $1.085.
“The rand remains largely rangebound, while market participants adopt a wait-and-see approach in these uncertain times,” said Citadel Global director Bianca Botes. “Global inflation and the risk of a recession is top of the agenda, with the European Central Bank expected to tighten monetary policy drastically in coming meetings, starting on Thursday.”
Bond prices fell, with the yield on the R2030 rising three basis points to 9.66%. Bond yields move inversely to prices.
Gold was 1.02% firmer at $1,974.28/oz, while platinum lost 0.1% to $983. Brent crude rose 5.27% to $104.52 a barrel.
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