JSE weaker, focus on US inflation data

The JSE closed weaker on Monday, with global markets mixed as investors await US inflation data this week for further insights on when the Federal Reserve is likely to begin cutting interest rates.

Investors will get the latest insights on inflation when a report on consumer price inflation for February is released on Tuesday. The markets expect a 3.1% year-on-year increase, according to Bloomberg, matching the January figure.

A month ago, a hotter-thanexpected consumer inflation report put financial markets under pressure as market participants were forced to push back on bets for when the Fed would start cutting interest rates.

Last week, Fed chair Jerome Powell said the central bank is “not far” from getting enough confidence about inflation to begin cutting rates. The Fed has already raised its main interest rate to the highest level since 2001 to bring down inflation, reported Bloomberg.

The consumer inflation report will come before the producer inflation numbers, which will be released later this a week. The two inflation reports are among the last major economic reports expected before the federal open market committee (FOMC) March policy meeting.

“With the Fed signalling that it is getting closer to cutting interest rates — after tight monetary policy and record high interest rates — markets are positioning for rate cuts in June,” said Citadel Global director Bianca Botes. “The focus now shifts to this week’s inflation reports, and the FOMC economic forecast, to be released when the committee meets from March 19-20.”

The JSE all share lost 0.32% to 73,481 points and the top 40 0.26%. Precious metals added 1.78%.

Industrial metals fell 2.82%, resources 0.9%, banks 0.25%, financials 0.17% and retailers 0.21%.

At 6pm, the Dow Jones industrial average was 0.12% weaker at 38,676 points and the S&P 500 had lost 0.19%. In Europe, the FTSE 100 was little changed, while France’s CAC 40 lost 0.17% and Germany’s DAX 0.49%.

Shares in automotive components manufacturer and battery maker Metair led the gains on the JSE — rising 23% to R12.18, after the company said it expects to return to profitability in the year to end-December as the group focused on the recovery of the wiring business.

The rand kept steady on the day, touching an intraday best of R18.6175/$. At 6.14pm, the rand had strengthened 0.35% to R18.6487/$, 0.48% to R20.3734/€ and 0.62% to R23.8836/£. The euro was 0.11% weaker at $1.0926.

Gold gained 0.13% to $2,181.88/oz and platinum rose 2.69% to $936.51/oz. Brent crude was 0.91% firmer at $82.53 a barrel.