The JSE reversed the session’s earlier losses on Thursday amid mixed global markets as the latest US labour market report somewhat eased investor nerves over the possibility the world’s largest economy may fall into a recession.
Initial unemployment claims came in lower than expected last week, offering a glimmer of optimism amid other signs of a softening labour market.
The report comes as global markets are already on high alert after the most recent nonfarm payroll report indicated a sharper-than-expected slowdown in job growth, sparking concerns about a potential recession.
While markets focus primarily on the nonfarm report — as it provides the broadest view of employment trends, including job creation, wages, and hours worked — the weekly jobless claims are more focused on short-term trends and volatility, providing valuable insights which can influence expectations for the likes of interest rate decisions.
The JSE all share gained 0.47% to 80,739 points, with major indices mixed, with the top 40 up 0.51%.
At 5.40pm, the Dow Jones industrial average was 1.49% firmer at 39,340 points, while markets in Europe were mixed.
A weaker yen to the dollar aided markets on Thursday after a surge in Japan’s currency caused the unwinding of the popular carry trade, with hedge funds among the culprits cited for Monday’s stock drop, reported Bloomberg.
Some analysts have pointed to the nonfarm report and other economic indicators, such as sluggish manufacturing and construction activity, as evidence of a possible recession in the US, while only a slight downturn may be likely.
Others commentators believe Monday’s sell-off was simply a case of a major market correction, driven by investor sentiment and technical factors rather than fundamental economic concerns.
Some experts also suggest the market is experiencing a “repricing” of risk as investors reassess their expectations for economic growth and interest rates, while others have cautioned that there may be more pain.
“Today's encouraging jobless claims data, combined with stabilising treasury yields and a decrease in Wall Street's volatility index, may help alleviate some concerns sparked by last week’s disappointing jobs report,” said Oanda senior market analyst Kelvin Wong.
“However, with inflation data on the horizon and the stock market still recovering from its largest decline this year, it remains to be seen how significantly this will shift investor sentiment.”
At 6.05pm, the rand was little changed at R18.3685/$ and R20.0414/€, while it had weakened 0.29% to R23.3973/£.
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