The JSE closed firmer but off the day’s high on Thursday after data showed US consumer inflation slowing as expected.
The consumer price index (CPI), which measures the cost of a broad basket of goods and services, declined by 0.1% in December, while core inflation — which eliminates volatile food and energy prices and is regarded as a better indicator of underlying price pressures — rose 0.3% in the month and 5.7% from a year ago, also in line with expectations.
“Stocks initially rallied as inflation continues to ease and as Fed members are clearly signalling a smaller tightening pace going forward,” said Oanda senior market analyst Edward Moya.
“It became clear fairly quickly that stocks would not hold on to initial gains as we will likely remain being data-dependent going forward,” he added. “The US labour market is still hot and much of the relief we saw with energy prices appears to be going away this month.”
The JSE all share closed 0.13% higher at 78,627.55 points — it gained more than 0.6% earlier in the session — while the top 40 added 0.14%. Banks, financials and food producers were the biggest winners, adding 1.74%, 1.37%, and 0.52%, respectively. Precious metals topped the losers, easing 0.25%, followed by industrials and industrials metals which were down by 0.2% and 0.18%, respectively.
Markets are watching the Fed’s moves closely as officials battle against multi-decade high inflation, while policymakers are weighing how much further they need to go with interest rate hikes to slow the economy and tame inflation.
“Inflation isn’t broadly coming down, but it is cooling as the economy starts to feel the impact of the Fed’s earlier rate hikes,” said Moya. “Until we see strong signs the labour market is cooling, the Fed will keep suggesting a rate hike could be coming.
“The Fed appears poised to deliver a 25 basis-point rate hike at the February 1 meeting and then be data-dependent for the March and May meetings,” he added.
At 7.02pm, the Dow Jones industrial average was up 0.43% at 34,118.31 points, while in Europe, the UK’s FTSE 100 closed 1.06% higher, while France’s CAC 40 and Germany’s DAX each gained 0.74%.
The rand firmed along with emerging-market currencies after the inflation data was released, with the local currency touching an intraday best in two months at R16.68/$.
Gold gained 0.83% to $1,890.7/oz, while platinum fell 0.47% to $1,064/oz. Brent crude was 1.46% firmer at $84.13 a barrel.
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