The JSE closed firmer amid mixed global markets on Thursday as investors considered US labour market data, while bitcoin reached record highs.
The market’s focus is on Friday’s nonfarm payroll (NFP) report, which will offer insight into the accuracy of Federal Reserve chair Jerome Powell’s upbeat assessment of the US economy.
Speaking in a moderated panel at the New York Times’ summit on Wednesday, Powell said that the US economy was strong enough to allow policymakers to proceed cautiously on rate cuts. However, he stopped short of challenging market expectations of a December rate cut.
He noted that the labour market was improving, with lower downside risks, and growth was stronger than expected, though inflation was slightly higher.
Powell’s comments suggest that the Fed may slow down its rate-cutting pace. According to Fed funds futures trading, there is a 78% chance of a 25 basis point (bps) rate cut at the December 17-18 meeting, but a 64% chance of policymakers holding steady in January.
According to a Bloomberg survey of economists, the US economy is expected to have added 214,000 jobs in November. This NFP labour report is likely to play a big role in informing the Fed’s rate decision at its upcoming policy meeting.
The JSE all share gained 0.62% to 86,846 points, with major indices mixed, while the top 40 added 0.74%.
At 6.30pm, the Dow Jones industrial average was 0.23% weaker at 44,909 points, with markets also firmer in Europe.
Bitcoin surged to a record high of about $103,000, driven by hopes for a crypto-friendly Trump administration.
Bloomberg reported earlier that the token’s rally was fuelled by president-elect Donald Trump’s appointment of Paul Atkins as chair of the Securities and Exchange Commission.
The rand kept steady on the day, reaching an intraday best of R18.005/$.
TreasuryOne currency strategist Andre Cilliers said the rand remained anchored near R18.1550, with resistance at R18.2650 and support at R17.9550.
At 6.30pm, the rand had strengthened 0.59% to R18.0284/$ and R22.9952/£, while it was little changed at R19.0563/€.
“Global risk events, rather than domestic news, dominate sentiment,” said Cilliers. “The dollar remains supported by Powell’s cautious tone on further rate cuts.
“In the short term, today’s weekly jobless claims data and tomorrow’s nonfarm payrolls are likely to set the tone for the dollar and, by extension, the rand,” said Cilliers.
“A weaker-than-expected payroll reading could soften dollar strength, giving the rand room to recover.”
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