The JSE closed weaker amid mixed global peers on Wednesday, while the rand weakened for a fourth consecutive session as investors assessed the latest US consumer inflation data.
October’s consumer price index (CPI) rose 2.6% year on year and 0.2% month on month, aligning with forecasts. Core inflation also met expectations, increasing 3.3% year on year and 0.3% month on month.
Inflation concerns have resurfaced after the postelection rally. Investors are weighing the potential impact of president-elect Donald Trump’s policies on inflation and economic growth.
This uncertainty has driven US treasury yields higher, signalling increased borrowing costs, reported Bloomberg.
Minneapolis Fed president Neel Kashkari said that inflation data would be a key focus for the central bank in the coming weeks. He noted that any upside surprises could prompt caution.
According to the CME FedWatch tool, 80% of traders anticipate a December rate cut. However, economists warn of potential inflationary pressures after Trump’s election, citing his campaign promises of high tariffs on imported goods and corporate tax cuts.
“The US inflation came out in line with market expectations, keeping next month’s potential 25 basis points interest rate cut firmly in sight,” said TreasuryONE director and head of market risk Wichard Cilliers.
The JSE all share lost 0.47% to 83,803 points and the top 40 0.48%. Food producers gained 0.19%. SA listed property fell 1.09%, financials 0.65%, banks 0.62%, industrials 0.48% and industrial metals 0.26%.
At 6.35pm, the Dow Jones industrial average was 0.42% firmer at 44,095 points. In Europe, the FTSE 100 was little changed, while France’s CAC 40 lost 0.14% and Germany’s DAX 0.3%.
Several key economic indicators are scheduled for release later this week. The producer price index (PPI) data is scheduled for release on Thursday, while retail sales numbers will be announced on Friday. The releases will provide valuable clarity on the US economy’s performance.
“The initial reaction placed the dollar on the retreat a bit, but this was short-lived as the dollar continued where it left off the past few days, trading firmer”, said Cilliers.
At 6.47pm, the rand had weakened 0.47% to R18.1791/$ and 0.25% to R23.1159/£, while it was little changed at R19.2165/€. The euro was 0.46% weaker at $1.057.
“The rand has been one of the worst-performing currencies since last week’s election win by president-elect Trump.”
In the commodities markets, gold lost 0.24% to $2,591.7/oz and platinum 0.52% to $941.07/oz. Brent crude was 0.66% firmer at $72.06 a barrel.
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