The JSE closed firmer on Wednesday, strengthening along with its global peers after US consumer inflation came in better than expected.
The consumer price index (CPI) for April rose 0.3%, less than the market estimates for a 0.4% monthly increase. On a year-on-year basis, CPI rose 3.4%, in line with expectations. Core CPI, which strips away volatile food and energy prices, was in line with expectations for both the month and year.
The US’s producer price index released on Tuesday came in hotter than market expectations. However, concern was partially mitigated by a revised 0.1% decline in March.
Both reports boosted expectations for Federal Reserve rate cuts in the near future. Trading in Fed funds futures now suggests a 51.7% likelihood that the world’s most influential central bank will ease rates at its September meeting. On Tuesday the chance of a rate cut the same month was 44.9%, reported Bloomberg.
Investors will now be watching the Fed’s favourite inflation data for April — the personal consumer expenditure numbers — which will be released at the end of May.
The JSE all share gained 0.93% to 79,361 points and the top 40 moved ahead 1.06%.
At 5.45pm, the Dow Jones industrial average was 0.61% firmer at 39,800 points and the S&P 500 added 0.84%. In Europe, the FTSE 100 added 0.21%, France’s CAC 40 0.17% and Germany’s DAX 0.85%.
Locally, retail trade sales in March beat economists’ expectations, increasing 2.3% year on year after declining 0.7% in February and 2% in January. However, this implies a negative contribution from the sector to total GDP at the start of 2024 and raises the risk of GDP contracting for the first quarter.
According to Stats SA, the positive year-on-year move in March was mainly due to a 6.4% increase in sales at general dealers, which contributed 2.8 percentage points to the increase.
On a month-on-month basis retail trade sales increased 1.4% in March compared with February.
At 6pm, the rand had strengthened 0.45% to R18.3165/$ — having reached an intraday best of R18.2728 against the dollar. It was little changed at R19.8887/€ and R23.1792/£. The euro was 0.41% firmer at $1.0857.
Gold gained 0.95% to $2,378.74/oz and platinum 1.13% to $1,066.90/oz. Brent crude was 0.38% firmer at $82.66 a barrel.
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