The JSE was weaker on Thursday morning, along with its global peers, while the rand was weaker in line with the emerging-market currencies as investors await a key inflation report in the US.
Economists polled by Bloomberg project the consumer price index and the core measure that excludes food and energy to both have cooled on an annual basis in October, but the rate is still consistent with persistent and elevated inflation.
The market expectation is for a print just below 8% year on year. However, if the figure is above 8%, the focus will shift firmly to Jerome Powell and the Federal Reserve. Their recent hawkish tone will just be reiterated, and the more aggressive hikes will be justified.
“We’re seeing some risk aversion in financial markets on Thursday as we await inflation data from the US later in the week,” said Oanda senior market analyst Craig Erlam.
“It probably won’t come as a surprise to many that we’re seeing stock markets in the red considering how well they've performed in recent days and weeks,” added Erlam. “It would appear we’ve seen a lot of buying on the hope of a Fed pivot and some weaker inflation figures.”
The JSE all share had lost 0.84% to 69,054 points and the top 40 0.91%. Industrial metals had fallen 1.06%, banks 1.36%, financials 1.11%, resources 0.8% and industrials 0.77%.
Earlier in Asia, Shanghai Composite fell 0.39%, Hong Kong’s Hang Seng 2% and Japan’s Nikkei 0.98%.
The rand and the rest of the emerging-market space have enjoyed the recent sell-off in the dollar, said TreasuryOne currency strategist Andre Cilliers. “This could all unwind a bit later this afternoon if the US inflation comes out above 8%.”
At 9.55am, the rand had weakened 0.35% to R17.8164/$, 0.06% to R17.8109/€ and 0.67% to R20.2732/£. The euro was little changed at $1.0004.
Gold was little changed at $1,706.03/oz, while platinum firmed 0.43% to $989.7/oz. Brent crude was unchanged at $92.31 a barrel.
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