The JSE closed little changed on Wednesday as the previous day’s rebound gave way to stronger-than-expected US producer inflation data and its potential impact on interest rates.
US PPI eased to 0.5% in September from 0.7% a month earlier, but well above market expectations of a 0.3% increase, and further insights into US prices will be available on Thursday with the publication of the consumer price index.
Markets were also waiting for the minutes from the Fed’s latest meeting, due later this evening, for clues on the Federal Reserve’s intentions after it held rates steady last month.
Comments by the Fed officials suggesting that the recent sell-off in bonds — which saw the 10-year Treasury yield flirt with 5% — might negate the need for any further interest-rate hikes, were received as dovish by investors.
Still, the yield on 10-year notes declined after the hotter-than-expected inflation data, reaching the lowest level since September 29, Bloomberg reported.
“Stocks seemed to shrug off a hot PPI report and focused on the latest Fed speak that had two hawks dial down the immediate need for further tightening,” said Oanda senior market analyst Edward Moya.
“Stocks might struggle for further gains until investors see tomorrow’s [Thursday’s] CPI report, which could come in hot given that producer prices were supported on higher energy and food prices.”
The JSE all share ended the day at 73,849.53 points, up just 0.01%, while the top 40 eased less than 0.06%.
At 7.14pm, the Dow Jones industrial average was 0.14% weaker at 33,691.90 points, while the broader S&P 500 was little changed. Markets in Europe ended the session mixed.
Investors continue to assess the war unfolding between Israel and Hamas after the militant group launched an attack on Israeli positions and civilians in the deadliest offensive in 50 years. President Joe Biden has condemned the attacks as terrorism and reaffirmed the US’s commitment to stand with Israel.
“The latest round of Fed speak supported the initial move higher for stocks, but too many geopolitical risks and start of earnings season has investors cautiously buying into this rally,” said Moya.
At 6.55pm, the rand had strengthened 0.772% to R18.84897/$, 0.72% to R19.98779/€ and 0.63% to R23.17324/£. The euro was little changed at $1.06044.
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