The JSE was little changed on Thursday, while global markets were mixed as investors watched the latest batch of US jobs reports for further insights into the Federal Reserve’s interest rate path.
The number of Americans applying for unemployment benefits was unchanged last week and remains historically low as the labour market continues to show resilience in the face of high interest rates and elevated inflation, reported Bloomberg.
The US labour department reported unemployment claims for the week ending April 27 amounted to 208,000, the same as the previous week. The number is less than economists polled by Bloomberg expected and is the lowest since mid-February. It is the latest signal that the job market remains solid despite high interest rates.
The Fed left the policy rate unchanged at 5.25%-5.5% on Wednesday, as expected. In its policy statement, the Fed acknowledged that there had recently been a lack of progress towards the 2% inflation target.
Fed chair Jerome Powell did not explicitly signal a rate cut was coming this year and said it would probably take longer for the Fed to gain enough confidence in the downward trajectory of inflation. Investors initially found comfort after Powell signalled that he did not see oncoming rate hikes despite inflationary pressures.
According to data from CME Group, traders were forecasting six or more interest rate cuts at the beginning of 2024, but they are now largely betting on just one or two, if any.
Investors are now awaiting payroll and unemployment figures on Friday.
“The Fed remains cautious about inflation, holding interest rates steady as inflation has not yet consistently fallen to its 2% target,” said TreasuryOne currency strategist Andre Cilliers. “Powell minimised the likelihood of an upcoming rate hike, indicating that the current federal funds rate would be maintained.”
The JSE all share was little changed at 76,047 points — with major indices mixed. The top 40 was also unchanged.
At 5.45pm, the Dow Jones industrial average was 0.52% firmer at 38,098 points, while markets were mixed in Europe.
Shares in Life Healthcare Group fell 6.69% to R10.04 and it was the second-biggest loser on the local bourse. The group, however, said it expected first-half headline earnings from continuing operations to rise as much as 31.8%.
At 5.50pm, the rand had strengthened 0.1% to R18.6153/$, while it had weakened 0.18% to R19.9228/€ and 0.35% to R23.3519/£. The euro was 0.11% weaker at $1.0705.
Gold lost 1.03% to $2,299.85/oz and platinum 0.41% to $961.5/oz. Brent crude was 0.35% weaker at $83.16 a barrel.
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