JSE weaker for third day, traders cautious

The JSE was weaker for a third session running on Wednesday in line with lower global markets ahead of US data and corporate earnings later in the week.

With no market-moving local news to influence trading, the JSE drifted, taking direction from international bourses, which were mostly in limbo before publication of US inflation data on Thursday and Friday that could offer more clarity on the timing of interest rate cuts this year.

The JSE all share index closed down 0.32% at 73,568.98 points, while the top 40 weakened 0.31%.

“Markets are trading predominately flat and rangebound as traders err on the side of caution ahead of the key US CPI data due out tomorrow,” said Andre Cilliers, currency strategist at TreasuryONE. At 6.25pm, the Dow Jones industrial average was up 0.12%.

In Europe, London’s FTSE 100 closed 0.38% weaker, while France’s CAC 40 and Germany’s DAX were little changed.

The standout performance among global markets was Japan, where stocks hit a 34-year high. The Nikkei ended 2% higher, breaking above 34,000 for the first time since 1990.

“Japan is really interesting,” Reuters reports, quoting Duncan MacInnes, an investment director at British firm Ruffer. “The problems have been corporate governance, which is definitely improving, (and) it has tended to be a very cyclical market, so it gets hit especially hard when the market turns down.”

Equities have been rangebound since the beginning of the year as investors reassess their expectations of the timing and the pace of monetary policy easing after contrasting economic data and mixed signals from Federal Reserve officials, Reuters reported. All eyes are now on the US December consumer and producer inflation — the latter is due on Friday — which could help determine monetary policy trajectory for the Fed.

Market participants have scaled back expectations for a rate cut of at least 25 basis points in March, and now see a near 66% chance — down from about 86% in the last week of 2023, as per the CME FedWatch Tool, Reuters reported.

The rand was rangebound against the dollar in line with other emerging market currencies. At 5.50pm, the local unit had firmed 0.11% to R18.6763/$ after weakening 0.2% earlier to R20.4786/€ and 0.24% to R23.7768/£.

Gold was flat, and at 5.50pm was trading less than 0.1% weaker at $2,027.78/oz. Platinum was 1.05% softer at $921.20. Brent crude was up 0.46% at $77.64 a barrel.