The JSE pared losses on Wednesday, with global markets mixed as investors digested data that showed the US economy remained resilient.
US GDP data for the third quarter grew at a stronger-than-expected pace, accelerating at a 5.2% annualised pace. The boost came primarily from revisions to government spending and investments in non-residential structures, reported Bloomberg.
The data comes as investors bet that the Federal Reserve could be done with raising rates in its attempt to fight inflation and could even start cutting rates early in 2024.
Dovish comments from Federal Reserve governor Christopher Waller, considered the most hawkish official on the Federal Open Market Committee (FOMC), raised hopes that the central bank may indeed not need to raise interest rates further.
RMB analysts caution Waller’s comments included standard caveats about the uncertainties surrounding future activity and the pace of slowing.
Comments by other Fed officials, including Chicago Fed president Austan Goolsbee and Fed governor Michelle Bowman, expressed concern about overdoing restrictive measures and reinforcing that further actions will depend on economic data.
Fed officials’ comments come ahead of the FOMC’s policy meeting on December 12-13, with markets generally expecting the committee to keep its key lending rate steady.
“Dovish comments by Fed speakers have supported sentiment. However, with the US economy remaining resilient, the next point of focus is the core personal consumption expenditures (PCE) price index [released on Thursday],” said TreasuryOne currency strategist Andre Cilliers.
“Markets will be watching the PCE price index for signs of further moderation in inflation. A lower-than-market estimate number could see further optimism in the markets.”
The JSE all share lost 0.46% to 75,241 points, with major indices mixed, while the top 40 was down 0.39%.
At 6.10pm, the Dow Jones industrial average was 0.12% firmer at 35,439 points while markets in Europe were mixed.
The rand gave back some of the session’s gains but remained steady as “dovish comments by Fed speakers weakened the dollar to fresh multi-month lows”, said RMB analysts. “Emerging markets have benefited from the pullback in the dollar and the improved risk sentiment.
“However, one cannot ignore that the negative [local] news flow and structural challenges are curtailing the local unit,” RMB analysts said.
At 6.18pm, the rand had weakened 0.18% to R18.6421/$, having touched an intraday best of R18.4540/$. It had weakened 0.1% to R20.4408/€ and 0.14% to R23.6299/£. The euro was 0.27% weaker at $1.0965.
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