US inflation fear spurs bond yields
SA bonds fell the most in almost two months and the rand weakened for the first time in six days after a report showed US inflation jumped the most since 2008, sparking concern that rising prices may stifle growth in the world’s biggest economy and dim demand for emergingmarket assets.
SA bonds fell the most in almost two months and the rand weakened for the first time in six days after a report showed US inflation jumped the most since 2008, sparking concern that rising prices may stifle growth in the world’s biggest economy and dim demand for emerging-market assets.
The yield on SA’s benchmark R2030 bond rose 12 basis points to 9.08%, the highest closing level in a week. Since bond yields move inversely to their prices, it indicated a falling market, which was mirrored in the rand retreating to well above R14/$. The JSE all share index closed below 68,000 index points, after earlier trading as high as 68,402.98.
“The US Federal Reserve has tried its best to reassure markets that higher inflation is temporary and that no rate hikes are in sight,” said Axi market analyst Milan Cutkovic. “Nevertheless, investors are increasingly doubtful as inflation pressure builds. Global equity markets remain under pressure and the technology sector continues to see wild price swings.”
A report on Wednesday showed annual US consumer inflation rising to 4.2% in April, the highest level since 2008. The annualised figure was distorted by it being a direct comparison with the reading from April 2020, when the index was depressed due to the effect of the Covid-19 pandemic.
The JSE all share closed 0.3% higher at 67,424.27 while the top 40 closed 0.3% up, at 61,529.14. The rand was down 0.6% at R14.08/$ at 7.13pm after trading as strong as R13.95/$. It was little changed against the euro at R17/€ and the pound at R19.81/£.
Glencore led the gains among industrial miners, rising 3.16% to
R66.66. Kumba Iron Ore added 3% to R717.38, African Rainbow Minerals 2.26% to R290.41, Anglo American 1.91% to R677.70 and BHP Group 1.79% to R465.80.
Among retailers, TFG led losses, falling the most in four weeks, down 4.56% at R117.18. Massmart fell 3.69% to R55.38, Motus 3.59% to R87.53 and Mr Price 2.24% to R191.30.
Naspers’s share price rose almost 5% in morning trade after the group announced its proposal to swap its ordinary Naspers shares with those of Amsterdam-listed consumer internet subsidiary Prosus. This would be its latest move to close the gap between the underlying value of its assets and its market value.
Naspers shares had pulled back by afternoon, tracking a weak close in tech-heavy Nasdaq. Naspers fell 1.60% to R3,123.88, while Prosus firmed 2.66% to R1,466.62.