JSE weaker as global markets gain

The JSE reversed earlier gains on Tuesday while global markets made small gains as investors assessed recent US consumer inflation data.

Consumer price inflation (CPI) rose at a 3.1% annual rate in November from 3.2% in October, in line with market expectations. Core CPI, which strips away volatile food and energy prices, matched the annual pace set in October at 4%. The report comes a day before the Federal Open Market Committee concludes its two-day meeting on Wednesday. Markets largely expect the central bank to hold rates steady within the 5.25%-5.5% range, where they have been since July. However, they will hold on to chair Jerome Powell’s commentary for signals of when rate cuts could come.

“Inflation rose slightly in November after being unchanged in October.

Although the price surge has come off postpandemic highs, this report isn’t the best one for the Fed [Federal Reserve] officials,” said SPI Asset Management partner Stephen Innes.

“Traders are worried that inflation isn’t easing quickly enough, which might lead the Fed to keep interest rates higher for longer,” said Innes.

The JSE all share lost 1.72% to 72,621 points and the top 40 1.92%. Food producers added 0.51%. Industrial metals fell 5.27%, resources 3.78%, precious metals 2.12%, banks 1.98%, financials 1.69%, retailers 1.47%, industrials 0.71% and SA listed properties 0.23%.

At 6pm, the Dow Jones industrial average was 0.33% firmer at 36,523 points while markets in Europe were mostly unchanged.

On Wednesday, US producer inflation figures for November will be released, with markets expecting the data to show that the rate of inflation is easing. Investors are also looking ahead to other central bank meetings, including those of the European Central Bank and the Bank of England on Thursday, as well as the Swiss National Bank this week.

The rand pared the session’s gains, having touched the intraday best of R18.8346/$. The local currency has been trading around the R19/$, and trading ranges are expected to remain fairly tight ahead of the upcoming central bank monetary policy meetings this week, said TreasuryONE currency strategist Andre Cilliers.

At 6.23pm, the rand had strengthened 0.21% to R19.0286/$, having gained more than 0.7% in intraday trade, while it was little changed at R20.5331/€ and R23.8873/£. The euro was 0.26% firmer at $1.079.

Gold was little changed at $1,982.09/oz while platinum gained 1.85% to $924.8/oz. Brent crude rose 3.43% to $73.43 a barrel.