The JSE edged higher on Tuesday, with its global peers after the release of the US producer price index (PPI) report.
The PPI, which measures wholesale inflation, increased 0.2% in December, falling short of economists’ expectations of a 0.4% rise, as polled by Bloomberg. Core PPI, excluding food and energy, remained flat.
The PPI report has eased concerns about inflation acceleration, sparking a positive reaction in the stock market.
Investors now shift their focus to Wednesday’s consumer price index (CPI) report, which will provide further insight into the Federal Reserve’s next interest rate policy move. The CME FedWatch Tool indicates an 80% chance that the Fed will maintain interest rates at its upcoming meeting.
“Despite the better-than-expected report, markets remain cautious due to persistently high inflation readings and better-than-expected economic data [such as Friday’s jobs report], which have led to concerns that the Fed may reduce interest rate cuts this year,” SPI Asset Management partner Stephen Innes said.
“Initially, the Fed hinted at two interest rate cuts in 2025, down from the initial projection of four. The CPI report will significantly impact market expectations regarding the Fed’s future actions. A strong inflation reading could reinforce expectations of no rate cuts in 2025, while a weak reading may alleviate market concerns about the Fed’s next move,” Innes said.
The JSE all share gained 0.10% to 82,123 points and the top 40 was up 0.2%.
At 6pm, the Dow Jones industrial average was 0.26% firmer at 42,407 points. In Europe, the FTSE 100 lost 0.21% while France’s CAC 40 added 0.32% and Germany’s DAX 0.64%.
Despite a market-friendly PPI report, TreasuryONE director and head of market risk Wichard Cilliers cautioned against overinterpreting its link to CPI, noting that the data shows broad price cooling, except for energy.
The rand kept steady below R19/$ for the day. At 6.10pm, it had firmed 0.37% to R18.92/$ and 0.33% to R23.09/£, while it had weakened 0.13% to R19.49/€. The euro was 0.5% firmer at $1.03.
“Despite the rand’s recent underperformance, SA’s GDP growth forecast of 1.7% for 2025 and solid fundamentals continue to support a positive outlook,” Cilliers. said. “Markets await further tariff updates, inflation data and SA policy announcements to guide sentiment.”
Gold was little changed at $2,672.84/oz, while platinum lost 1% to $952.35/oz. Brent crude was 0.81% weaker at $80.35 a barrel.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.