The JSE closed weaker while US and European markets were generally firmer on Monday as investors considered comments on US interest rates from officials at the Federal Reserve.
The rally at the end of last week — when the local bourse reached its highest level in almost seven months — was built on the perception that a single, softer-than-expected consumer inflation report would prompt the Fed to ease its aggressive monetary tightening.
Fed officials have given little signal that the bank could deviate from its tightening path any time soon. Governor Christopher Waller, attending a conference in Sydney, Australia, earlier on Monday cautioned that the central bank still had a long way to go before it stops raising interest rates.
Waller’s comments echoed those of Fed chair Jerome Powell and other colleagues who said rate increases were far from over though the pace could possibly slow.
“With many US data sets turning weaker, the Fed now has a real dilemma on its hands,” RMB analysts said in a note. “Inflation has not dropped sufficiently to restore its full credibility, but there are clear indications that the US economy is losing its momentum.
“It is completely justified for investors to consider a pivot in US monetary policy where rates will increase less aggressively, and investors bring their expectations for rate cuts forward,” they added.
The JSE all share eased 0.22% to 72,822.47 points and the top 40 slipped 0.25%, with food producers down 1.74%, resources 0.64% and industrial metals 0.6%.
At 6.44pm, the Dow Jones industrial average was 0.16% higher at 33,802.83 points, while the S&P 500 was 0.16% lower. Markets in Europe closed mostly firmer.
In China, authorities issued a 16-point plan on Friday to boost the country’s property market, a move regarded as a strong sign that President Xi Jinping is turning his attention to boosting the world’s second-largest economy that has been dragged down by the government’s zero-Covid policy.
Covid remains a threat, though, with Beijing on Monday reporting a record number of daily cases.
“It’s been quite a choppy start to the trading week, with much of the focus on China’s Covid relaxation measures and property market support,” said Oanda senior market analyst Craig Erlam. “Unfortunately, both come at a time of record infections in major cities.”
“Those measures are not ambitious enough to make any difference as rising cases could mean activity is going to weaken,” Erlam added.
At 6.31pm, the rand had weakened 0.18% to R17.2855/$ and 0.05% to R17.8773/€, but it was 0.6% stronger at R20.2694/£.
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