The JSE closed weaker amid mixed global peers on Tuesday, as investors looked towards the US Federal Reserve’s annual conference at Jackson Hole this week for guidance on the future direction of interest rates.
Tech companies’ earnings are in focus this week as are retailers’ reports, in which investors will be looking for clues about the state of US consumer spending and health of the wider economy.
Fed chair Jerome Powell is scheduled to give a highly anticipated speech at the Jackson Hole symposium on Friday. His words will be scrutinised for an indication of the central bank’s path on interest rates.
The Fed has hiked its main interest rate to the highest level since 2001 in hopes of bringing high inflation down to its target of 2%. Inflation has fallen considerably from its peak above 9% last year, but economists say getting it to the Fed’s target may prove difficult.
Looking at the bond market as an indication of where interest rates could go, Citadel Global director Bianca Botes said: “The benchmark 10-year US treasury yield jumped to its highest level since 2007 in Monday’s trade, ahead of Friday’s highly anticipated speech from Powell. The bond market looks to be anticipating that the Fed will remain on its hawkish monetary policy path. The majority of polled analysts believe that the US central bank is done raising rates, while traders are betting on a 40% chance of a final hike by November,” said Botes.
The JSE all share lost 0.65% to 73,277 points and the top 40 0.71%. Food producers added 0.13% and precious metals 0.12%. Retailers fell 1.71%, industrials 1.19%, SA listed property 0.52%, resources 0.47%, industrial metals 0.29% and financials 0.25%.
At 6pm, the Dow Jones industrial average was 0.48% weaker at 34,296 points and the S&P 500 was down 0.27%. Markets in Europe were firmer.
The rand held steady below R19/$ on the day, reaching an intraday best of R18.7038/$ — the best level in almost two weeks.
“The rand is trading firmer in line with generally stronger emerging market currencies and a softer dollar, said TreasuryOne currency strategist Andre Cilliers. “Dealers await Wednesday’s local CPI data before Powell’s speech on Friday. Concerns over global growth and higher rates are likely to limit any recovery in [emerging market] currencies for now.”
At 6.11pm, the rand had strengthened 0.98% to R18.7913/$, 1.32% to R20.3855/€ and 1.02% to R23.9355/£. The euro was 0.42% weaker at $1.0848.
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