The JSE touched a record high on Monday, with global peers firmer as investors bet on a potential slowdown in rate hikes from the Federal Reserve and brace for a data-packed week locally and abroad.
The JSE all share index gained 1.08% to 80,128 points, having touched an intraday best of 80,358 as “prospects of a cooling US economy and a slowing in the pace of interest rate hikes lifted sentiment,” said Citadel Global director Bianca Botes.
Investors are betting that the Fed will slow the pace of its rate hikes after economic data last week, such as retail sales, showed consumers are under pressure and past rate hikes are working.
Comments from Fed Governor Christopher Waller on Friday favouring a 25-basis point rate increase at the next meeting also lifted investors’ hopes for a downshift in tightening.
“With no Fed officials scheduled to speak this week, investors will monitor another batch of economic data, including company earnings reports and the Fed’s preferred inflation measure, the personal consumption expenditure price index, which is due out on Friday,” said Oanda senior market analyst Craig Erlam.
The JSE top 40 index added 1.14%, while banks gained 1.8%, financials jumped 1.58%, retailers were up 1.5%, industrial metals collected 1.16%, resources garnered 1.07% and the precious metals and mining index advanced 0.59%.
The SA Reserve Bank’s decision on interest rates is due on Thursday. Market views are mixed about whether the monetary policy committee (MPC) will raise rates by 25 or 50 basis points. According to RMB analysts, there is even an outside chance that the MPC will not increase them at all. “Our call is for 50 bps, the last move in the cycle,” they said.
On Tuesday, purchasing managing index (PMI) data is being released across the globe — including in the US and Europe — while Thursday sees the release of US fourth-quarter 2022 GDP statistics.
“The PMI numbers will be closely watched as they will offer further insight into whether it is feasible to call for a soft landing rather than an outright contraction in the global economy in 2023,” said RMB analysts. “The broader consensus forecasts from Bloomberg are pointing to better performance for the US and eurozone.”
At 7pm, the Dow Jones Industrial Average was 0.97%% firmer while the UK’s FTSE 100 gained 0.18%, France’s CAC 40 added 0.52% and Germany’s DAX was up 0.46%.
At 6.15pm, the rand had weakened 0.38% to R17.1635/$, 0.46% to R18.6499/€ and 0.31% to R21.2350/£. The euro was 0.1% firmer at $1.0865.
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