JSE ends weaker amid US recession fears

The JSE closed weaker on Friday, while global stocks attempted a rebound as investors evaluated a week’s worth of US corporate earnings and data that signalled a contracting US economy.

The JSE all share index finished the week softer, with global markets also looking set for a lower weekly close as “traders weighed hawkish commentary from the Federal Reserve officials against data that showed the labour market is starting to soften,” said TreasuryONE currency strategist Andre Cilliers.

The JSE all share lost 1.22%, dragged lower by industrial metals, banks, financials and resources.

The latest US corporate earnings were a mixed bag and investors are trying to get a sense of how companies are handling high inflation, a slowing economy and concerns about a recession.

“The latest earnings come as investors worry about the potential for a recession amid the Fed’s fight against inflation,” said Oanda senior market analyst Craig Erlam.

“The rates hikes have weighed on economic growth and while inflation has eased, it remains high and is still squeezing consumers.”

US manufacturing data came in worse than expected, while jobless claims were higher and US retail sales data also disappointed.

More hawkish comments from Federal Reserve officials ahead of the central bank’s May policy meeting also worried investors. Among them, Cleveland Fed president Loretta Mester said higher interest rates were likely to continue.

“The poor data, along with the likelihood of a still hawkish Fed, have raised concerns for global growth as a recession looms in the US,” said Cilliers. “The mixed signals within the market kept a lid on any gains on the day.”

The JSE all share lost 1.22% to 77,911 points and the top 40 retreated 1.28%. Industrial metals fell 5.27%, resources declined 3.55% and the precious metals and mining index gave up 1.48%.

At 5.40pm, the Dow Jones industrial average was 0.2% weaker, while the FTSE 100 had gained 0.15%, France’s CAC 40 added 0.51% and Germany ’ s DAX advanced 0.54%.

At 5.48pm, the rand had weakened 0.41% to R18.0902/$, 0.5% to R19.855/€ and 0.17% to R22.4612/£. The euro was little changed at $1.0973.

Gold lost 1.39% at $1,976.16/oz, while platinum gained 2.88% to $1,121.92/oz. Brent crude was 0.73% firmer at $81.39 a barrel.