The JSE was weaker on Monday morning, tracking weaker global markets as investors remained cautious ahead of a key US economic data release.
Friday’s stronger-than-expected US nonfarm payroll (NFP) report raised concern that the US Federal Reserve might proceed with caution, casting doubt on further interest rate cuts.
Market expectations now suggest a high likelihood of the Fed maintaining interest rates at current levels, at its upcoming meetings. According to the CME FedWatch Tool, traders are pricing in a 97% probability of no rate change at the January 29 meeting and a nearly 75% chance of rates remaining unchanged in March.
This week, investors will closely watch key economic data releases, including the December consumer price index (CPI) on Wednesday and the producer price index (PPI) report on Tuesday, which will provide insights into wholesale inflation.
Additionally, investors will be listening to comments by Kansas City Fed president Esther George and New York Fed president John Williams on Tuesday for potential guidance on future monetary policy decisions.
“A strong jobs print has lent itself to concerns about high borrowing costs and the pace of easing in the world’s largest economy,” IG senior market analyst Shaun Murison said. “The resultant effect has been a stronger dollar, higher yields and weakness in equity markets.
“Global equity markets have followed suit and, in turn, we are expecting a softer start for our local bourse,” he added.
At 10.20am, the JSE all share had lost 0.92% to 82,614 points and the top 40 was down 0.95%.
At the same time in Europe, the FTSE 100 was down 0.31%, France’s CAC 40 0.52% and Germany’s DAX 0.32%.
Earlier in Asia, the Shanghai Composite lost 0.25%, Hong Kong’s Hang Seng 1% and Japan’s Nikkei 1.05%.
“The rand has softened further in risk-off trade. There is no high-impact data scheduled today, although US CPI inflation data on Wednesday is likely to be a major catalyst for near-term direction,” Murison said.
At 10.35am, the rand had weakened 0.28% to R19.18/$, 0.21% to R19.59/€ and 0.17% to R23.28/£. The euro was little changed at at $1.02.
Gold lost 0.79% to $2,687.11/oz, while platinum added 0.81% to $990.10/oz.
Brent crude was 2.23% firmer at $81.54 a barrel.
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