JSE lifts as investors make sense of comments by US Fed

The JSE was firmer on Tuesday morning, while its global peers were mixed as investors weighed the prospect of faster Federal Reserve policy tightening and the effect on global growth from the war in Ukraine

The Fed’s St Louis president, James Bullard, said the central bank needed to move quickly to raise interest rates to about 3.5% in 2022 with multiple half-point hikes, and that it shouldn’t rule out rate increases of 75 basis points. Fed chair Jerome Powell has said that a 50 basis-point increase is possible at the Fed’s next meeting. Comments by colleagues since then have hardened expectations they’ll make that move, as officials extend a hawkish pivot to curb the most severe inflation since 1981.

Meanwhile, the World Bank cut its forecast for global economic expansion in 2022 on Russia’s invasion of Ukraine, with Bank's chief economist, Carmen Reinhart, saying the global economy was passing through a period of “exceptional uncertainty” and added that she wouldn’t rule out further downgrades to the growth outlook.

“The impact of the statements [by Bullard] was minimal in the end as it likely doesn’t reflect the views of the FOMC [federal open market committee] yet,” said Oanda senior market analyst Jeffrey Halley.

At 10.25am, the JSE all share had gained 0.9% to 74,045.94 points and the top 40 0.84%. Precious metals had risen 3.25%, resources 1.97%, banks and financials 1.11% each and industrial metals 1.08%. 

At the same time, London’s FTSE had lost 0.19%, France’s CAC 40 0.57% and Germany’s DAX 0.59%.

Earlier in Asia, the Shanghai Composite was little changed. Hong Kong’s Hang Seng fell 2.32%, while Japan’s Nikkei gained 0.69%. 

At 10.36am, the rand had weakened 0.36% to R14.7124/$, 0.6% to R15.8965/€ and 0.6% to R19.1708/£. The euro was 0.24% firmer at $1.0806.

In morning trade, the yield on the R2030 rose five basis points to 9.82%. Bond yields move inversely to prices.

Gold was little changed at $1,977.95/oz while platinum gained 0.59% to $1,021/oz. Brent crude lost 0.13% to $111.71 a barrel.

tsobol@businesslive.co.za