The JSE closed slightly stronger on Friday after key data releases this week pointed to continued slower inflation.
Data published by Stats SA earlier in the week showed SA's producer price index remained in deflationary territory in November, while consumer inflation accelerated mildly to an annualised 2.9%, still outside the Reserve Bank's 3%-6% target range.
“This week’s data releases clearly still reflect a very benign inflation picture,” said Elna Moolman, Standard Bank head of SA macroeconomic research.
Additionally, the results of the Bureau for Economic Research’s latest inflation expectations survey signaled that there is a general expectation for inflation to remain around the target not only in the near term but also in the medium term.
“This is particularly important for the Bank, as it signals that it is successful in anchoring expectations around the midpoint of its target range,” said Moolman.
Moolman said the generally benign inflation picture “vindicates the Bank’s decision at recent meetings to start cutting interest rates, and also signals that there is scope for it to continue cutting into 2025”.
Outside of SA, US initial jobless claims surged to their highest level in two months, fuelling concerns around a weak labour market and boosting bets that the US Federal Reserve will cut its key rate again next week.
Citadel Global director Bianca Botes said markets were confident in a 25 basis point rate cut by the Fed next week, with expectations for a total of 150 basis points in rate cuts next year.
At 5.15pm, Brent crude was up 0.72% at $73.87/barrel. Platinum, silver and palladium were down 0.73%, 1.67% and 1.33%, respectively.
After a three-day rally, the gold price dropped for a second day running, down 0.86% to $2,657.44/$, partly due to stronger-than-expected US PPI data which renewed concerns of stubborn US inflation.
“Despite this, gold remains supported by market expectations for multiple Fed rate cuts next year, amid signs of labour market softening and easing inflation pressures,” said Botes.
The JSE all share index closed 0.19% stronger at 87,129 points, with the top 40 index up by a similar margin. Industrials gained 0.97% and retailers 1.41%, with banks, financials and property also recording gains.
The mining sector weighed on the market’s overall gains, with precious metals down 2.75%, industrial metals 1.68% and oil, gas and coal 1.87%.
At 7.30pm the rand had weakened 0.46% to R17.8823/$, 0.6% to R18.7637/€ and 0.2% to R22.5712/£.
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