JSE weaker with focus on US jobs

The JSE closed weaker on Thursday along with global peers as investors focused on US labour market data for insights on the path of interest rates.

Latest weekly jobless claims data showed 220,000 claims were filed in the week to December 2. This is in line with what economists surveyed by Bloomberg expected and up 2,000 from the previous week, largely reflecting limited increases in layoffs, reports Bloomberg.

Thursday’s jobless claims numbers came the day before the US releases the monthly employment report in the form of the nonfarm payrolls. The figures come ahead of the Fed’s last meeting of the year next week. Economists surveyed by Bloomberg expect the unemployment rate to remain at 3.9% for November and the nonfarm payroll figure to have risen by 172,500. “The weekly jobless report shows slightly more US workers applied for unemployment benefits last week. The report might not have a big impact on the market, but it fills the gap while we wait for Friday’s report, which could be more impactful,” said SPI Asset Management partner Stephen Innes.

“The Fed wants to see the job market ease just enough for policymakers to feel comfortable that high interest rates are working, but a recession can be avoided and a soft landing achieved.

“So far, anticipation is rising that the Fed can nail a perfect landing for the job market and overall economy.

“Inflation has been slowing since hitting its peak two years ago, and expectations are building that the Fed’s next move will be to cut interest rates next year,” said Innes.

The JSE all share index lost 0.81% to 74,787 points, with major indices mostly weaker, while the top 40 was down 0.82%. At 5.40pm, the Dow Jones industrial average was little changed at 36,027 points, while markets in Europe were weaker.

According to Treasury-One currency strategist Andre Cilliers, risk aversion is firming ahead of the payroll data and US consumer inflation data, and monetary meetings of the Fed, European Central Bank and the Bank of England in the coming week, with Chinese inflation data also in the mix.

The rand broke a three-day losing streak, but remains under pressure as it flirts with R19/$, touching an intraday worst of R18.99/$.

At 5.49pm, the rand had strengthened 0.72% to R18.8242/$, 0.43% to R20.3106/€ and 0.58% to R23.6732/£. The euro was 0.21% firmer at $1.0789.