JSE muted as market weighs data

The JSE was little changed on Wednesday, while the rand was marginally firmer as markets attempted to rebound after higher-than-anticipated US inflation.

The inflation report, coupled with recent data showing a strong US economy and labour market, forced investors to acknowledge that the Federal Reserve (Fed) might not cut interest rates as early as they had hoped, let alone deliver multiple cuts this year.

According to Reuters, futures now see no more than 92 basis points (bps) of rate cuts in 2024. Up to 150bps had been priced in little more than a month ago. Odds of the first downward move being as soon as March have been reduced to as little as one in 10. A cut in May is at 50-50, while a quarter-point cut is now fully discounted until the Fed’s June 12 meeting.

Helping to keep things steadier was a calmer bond market and strong profit reports. Treasury yields were easing after shooting upward a day earlier on expectations the Fed would keep rates higher for longer, reported Bloomberg.

Fed vice-chair for supervision Michael Barr and Chicago Fed president Austan Goolsbee were expected to give comments later on Wednesday. Investors are hoping to hear what the officials would say in light of Tuesday’s strong inflation numbers.

“The Fed finds itself in a difficult position: if they cut rates prematurely, they risk letting the inflation genie out of the bottle, but if they keep rates too high for too long, it could result in more severe economic pain downstream,” said Adriaan Pask, CIO at PSG Wealth.

The JSE all share was little changed at 73,009 points — with major indices mixed, while the top 40 was 0.1% weaker. At 6.20pm, the Dow Jones industrial average was unchanged at 38,278 points and the S&P 500 had added 0.3%. Markets were firmer in Europe.

Shares in gold producer DRDGold fell 4.86% to R12.91 — the most in almost two months after the company reported a 10% rise in half-year profit. This despite a slight decrease in output, which was a result of a delay in the commissioning of four new sites to replace high-volume sites which had reached end of life.

At 6.31pm, the rand had strengthened 0.24% to R19.0614/$ and 0.43% to R23.9250/£, while it was little changed at R20.4495/€. The euro was 0.18% firmer at $1.0728.

Gold was unchanged at $1,991.14/oz, while platinum rose 3.21% to $897.38/oz. Brent crude was little changed at $82.51 a barrel.