JSE weaker amid Fed focus on inflation
The JSE slightly pared losses on Monday, with global peers trading cautiously as investors looked ahead to the latest reading of the Federal Reserve’s (Fed) preferred inflation gauge this week, as well as several corporate earnings reports.
The outlook for US consumer inflation and the timing of interest rate cuts remain in focus, with investors waiting for the release of the latest monthly personal consumption expenditures (PCE) price index report on Thursday.
Core PCE, the Fed’s preferred inflation gauge, is expected to rise 2.8% year on year. The report could indicate where the Fed will take interest rates this year, reported Bloomberg.
“Markets started the new week on a cautious note as the timing of rate cuts by the Fed gets pushed out further,” said TreasuryONE currency strategist Andre Cilliers. “Markets will be looking at the US PCE inflation number on Thursday, along with other data, for clues as to when the Fed could start cutting rates.”
The JSE all share lost 0.8% to 73,621 points and the top 40 0.81%. Industrial metals fell 3.23%, resources 1.76%, banks 1.18%, financials 0.98%, industrials 0.23%, SA listed property 0.19% and retailers 0.14%. Precious metals gained 0.41% and food producers 0.29%.
At 5.30pm, the Dow Jones industrial average was 0.12% firmer at 39,187 points, while markets were mixed in Europe.
Investors are also keeping an eye on corporate earnings, with several high-performing companies reporting this week, which will give investors greater insight into the state of tech and consumers.
Investors will also be watching whether the artificial intelligence momentum which saw stock markets rally last week will resume as economic and inflation risks linger, reported Bloomberg.
Shares in petrochemical giant Sasol fell the most in more than three weeks in intraday trade after the company said its profit dropped by a third in the six months to end-December, reflecting a drop in chemical and oil prices as demand in key export markets, such as China, sagged.
The other headwinds Sasol faced in the period under review included inventory destocking by customers in Europe, as well as the continuing electricity and logistics crises in SA. By the JSE close, the company’s share price had trimmed some of the losses and was down 2.02% to R143.05, down more than 23% year to date.
At 5.17pm, the rand had weakened 0.14% to R19.3421/$, 0.32% to R20.9665/€ and 0.3% to R24.5181/£. The euro was 0.21% firmer at $1.0841.
Gold lost 0.42% to $2,026.96/oz and platinum 2.18% to $879.18. Brent crude was 1.06% firmer at $81.82 a barrel.