The JSE pared gains on Friday, with global markets mixed as the previous session’s rally ran out of steam. Still, the local bourse rose 1.27% for the week, supported by industrial metals, which were 10.88% firmer, resources, which added 8.93%, and precious metals, which advanced7.38%.
Stock markets were higher this week after mixed but healthy indicators on the US economy ahead of the Federal Reserve’s meeting , where it is generally expected to hold interest rates steady.
Signs of resilience by the US consumer and persistent price pressures make a case for more Fed rate hikes, but are also signs the Fed could be leading the US economy on the path to a soft landing, reported Bloomberg.
Meanwhile, promising Chinese economic data added to the market’s optimism. The world’s second-largest economy’s factory output and retail sales gained momentum in August, indicating the economy picked up and suggesting that it could be slowly recovering.
“A steady dose of economic data supported the soft-landing case,” said Oanda senior market analyst Edward Moya. “The US economic resilience story could hold up, while inflation expectations come down.”
“Fed rate hike expectations for November might start to cool down if markets become convinced that inflation is getting conquered,” added Moya.
Caution returned in the market after news that the United Auto Workers union in the US officially launched a historic strike at three automaker plants.
“Stocks erased some of the gains as traders grew nervous over how long the UAW strike will last,” said Moya. “If the strike lasts a long time, dealers could run short of vehicles and prices could rise, impacting a US economy already under strain from elevated inflation.”
The JSE closed 0.32% firmer at 74,589.81 points — after gaining more than 1% in intraday trading — while the top 40 added 0.32%. Major indices were mixed.
At 5.45pm, the Dow Jones industrial average was 0.53% weaker while markets pared gains in Europe after being up more than 1% earlier.
The rand remained under pressure, touching an intraday worst of R19.1125/$ as strong US data supported the dollar.
“Strong US data outweighed the impact of the upbeat Chinese data on risk sentiment,” said TreasuryONE currency strategist Andre Cilliers. “Next week’s local MPC and Fed FOMC meetings will likely be the next significant drivers for the rand.”
“Eskom’s dire warning for power supply in the coming months, with a possibility of a stage 7 load-shedding, will possibly weigh on the rand going forward.”
At 5.51pm, the rand had weakened 0.14% to R19.0394/$, 0.48% to R20.32/€ and 0.13% to R23.5999/£. The euro was 0.28% firmer at $1.0672.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.