The JSE ended off the session’s lows on Friday, having traded weaker along with its global peers as investors digested US economic data and disappointing earnings reports from major tech companies.
Weak results and dim outlooks from Amazon, Microsoft, Alphabet and Meta weighed on sentiment with the JSE’s all share index falling by as much as 1.4% in intraday trade before recovering a little.
As the world dealt with the Covid-19 pandemic, tech companies buoyed the stock market. Analysts now say in an environment of stubbornly high inflation and rising interest rates, the disappointing results from these companies are signalling that tough days may be ahead.
Sentiment improved slightly after data from the US’s Bureau of Economic Analysis showed that the core personal consumption expenditures price index — the preferred gauge of inflation for the Federal Reserve — showed inflation stayed high in September but mostly within expectations.
The report comes as the Fed is preparing to deliver its sixth interest rate increase of the year at its policy meeting on Wednesday, with markets expecting another 75 basis points hike.
The market was also digesting the forward guidance from the European Central Bank, with the bank’s president saying the ECB could scale back on the aggressive rate hikes. The bank delivered its third 75-basis-point interest rate hike on Thursday.
“Risk aversion is tentatively starting to wane in the markets as investors consider whether the global monetary tightening cycle may be reaching a plateau,” said RMB analysts. “The Fed’s policy meeting next week holds plenty of two-way risk, with the markets watching closely for confirmation of recent pivot speculation.”
“Beyond recent intimations that Fed discussions are starting to revolve around the timing of an eventual policy downshift as recession risks rise and inflationary pressures ease, other major central banks have started to hint at a less hawkish policy outlook,” they added.
The JSE all share index lost 1.1% to 66,385 points, pulled lower by miners and drops for Naspers and its international arm Prosus. Naspers slumped 6.28% to R1,760 and Prosus 5.03% to R744.40. The top 40 was down 1.29%.
Despite a weaker close, the all share gained 1.29% for the week, lifted by banks and financials.
At 6.20pm, the Dow Jones industrial average was 2.22% firmer while markets in Europe were mixed.
At 6.23pm, the rand had weakened 0.99% to R18.1525/$, 0.74% to R18.027/€ and 1.16% to R20.0081/£. The euro was down 0.3% to $0.9932.
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