The JSE ended firmer after a see-saw session on Tuesday as investors assessed a second report in less than a week that indicated US inflation may be slowing.
The producer price index, a measure of wholesale inflation, rose 0.2% month on month in October, well below the market consensus estimate of 0.4%. The report from the US Bureau of Labor Statistics comes less than a week after better-than-expected CPI data, stoking optimism that price pressures could be easing.
However, markets are still assessing the Federal Reserve’s interest rate strategy. Fed vice-chair Lael Brainard said on Monday that the central bank could soon moderate the size of its interest-rate increases, signalling she favours slowing to a half-point hike as early as December.
Her comments came after Fed governor Christopher Waller said the bank still had a long way to go before it would stop raising interest rates, despite last week’s cooler inflation report.
“While the comments [Brainard’s in particular] are not official Fed statements, they align closer to market expectations for a slowdown to a 50 bps [basis points] hike in December versus the recent 75 bps moves, and adding to some small market cheer,” said Investec chief economist Annabel Bishop.
“Volatility and a degree of uncertainty are likely to persist into the December meeting however, with financial markets still very reactive to incoming US economic data, but there is space for further improvement in risk appetite,” Bishop added.
Markets also took some encouragement from Chinese foreign minister Wang Yi’s comments that the first face-to-face meeting with US President Joe Biden was a “new starting point”. Bloomberg reported the tone of the meeting may lend additional support to China’s financial markets, which have been on a tear in November amid signs of a moderation in the nation’s zero-Covid policy and property-market crackdown.
The JSE gained 0.24% to 72,998.69 points, led by industrial metals, which rose 2.12%, resources (1.32%), industrials (0.69%) and precious metals 0.43%. The top 40 was also firmer, adding 0.36%, but banks, financials, and retailers fell 2.08%, 1.89% and 1.3%, respectively.
US markets were also firmer, and at 7.07pm the Dow Jones industrial average was 0.58% higher at 33,730.20 points, while in Europe, France’s CAC 40 and Germany’s DAX closed 0.49% and 0.46% higher, respectively. London’s FTSE 100, however, lost 0.36%.
The rand which earlier strengthened below R17.15/$ was 0.33% firmer at R17.2581/$ by 6.50pm, but was 0.38% weaker at R17.907/€. The euro was 0.52% firmer at $1.0376.
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