The JSE was weaker on Thursday morning, along with its global peers as markets digest edthe US Federal Reserve chair Jerome Powell’s hawkish comments, sticking to the script of higher rates to fight inflation.
In testimony to Congress, Powell said more rate hikes were likely as the central bank tries to combat decades-high inflation. Inflation has cooled but “remains well above” the Fed’s 2% target, Powell said. Powell’s comments seem to have dashed investors’ hopes that the world's most influential central bank was nearing the end of its tightening cycle.
His comments come after last week’s two-day federal open market committee (FOMC) meeting, when the central bank held off from raising interest rates after 10 straight hikes.
Fed officials indicated that they saw rate increases totalling 50 basis points to the end of 2023. That would indicate two additional hikes, assuming 25 basis-point moves, according to Bloomberg. The Fed’s benchmark borrowing rate is currently 5%-5.25%.
“Wednesday’s first round of testimony by Fed chair Jerome Powell left markets with mixed views. While Powell stated that inflation above the 2% mark will result in further hikes, he gave no indication as to when future hikes would be imposed or what the size of those hikes would be,” Citadel Global director Bianca Botes said.
“Markets will pay attention later today, when Powell testifies before the Senate banking committee, for further direction,” added Botes.
At 10.15am, the JSE all share had lost 0.62% to 75,163.12 points and the top 40 was down 0.63%. Precious metals had fallen 2.1%, resources 1.65%, industrial metals 1.38%, SA listed property 1.01%, financials 0.27% and banks 0.22%.
In Europe, France’s CAC 40 was down 1.34% and Germany’s DAX 0.81%.
Earlier in Asia, the Shanghai Composite fell 1.31% and Japan’s Nikkei 0.92%. Markets in Hong Kong and mainland China are closed for a holiday.
At 10.19am, the rand was little changed at R18.3237/$, while it had weakened 0.2% to R20.1463/€ and 0.29% to R23.4245/£. The euro was 0.16% firmer at $1.10.
Gold lost 0.18% to $1,928.12/oz, while platinum was little changed at $943/oz. Brent crude was 0.13% firmer at $77.02 a barrel.
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