JSE softer on mixed set of US data

The JSE pared losses on Friday, with global markets mixed as investors digested a mixed set of economic data from the US.

For the week, the local bourse was down 0.99% as investors considered to what extent the data, which points to US inflation remaining elevated, will delay interest rate cuts by the Federal Reserve.

The headline consumer price index (CPI) report for February, which was released earlier in the week, was in line with market estimates on a monthly basis, but slightly higher than market estimates year on year.

Core CPI, which strips out food and energy from the headline reading, also came in higher than estimates.

The Producer price index (PPI), a measure of wholesale inflation, came in higher than expected for February. Year on year, the headline index rose 1.6%, the biggest move since September 2023. The core PPI, excluding food and energy, accelerated in February, coming in higher than estimates.

The PPI is considered to be a leading indicator of inflation, as it shows costs early in the supply chain. Other reports this week, such as retail sales, showed a softening US economy.

The two inflation reports and the retail sales are among the last key economic reports expected before the federal open market committee (FOMC) meeting on Tuesday and Wednesday. According to the CME Fed-Watch Tool, Fed funds futures are pricing in a 99% likelihood of the US central bank keeping interest rates unchanged at its policy meeting.

“This week’s inflation reports suggest that inflationary pressures remain persistent in the US and will add to the portfolio of evidence that supports keeping rates higher for longer, particularly when the FOMC meets this week,” said RMB analysts.

Bloomberg reported that other reports released last week showing some softening in the economy kept alive hopes that the long-term trend for inflation remained downward and that the Fed would cut rates three times this year, starting in June.

The JSE all share lost 0.48% to 72,990 points and the top 40 dipped 0.4%. Industrial metals gained 1.41%, resources 0.89% and food producers 0.27%. Retailers fell 1.65%, financials 1.28%, banks 0.96%, SA listed property 0.78%, industrials 0.5% and precious metals 0.33%.

At 5.40pm on Friday, the Dow Jones industrial average was 0.31% firmer at 38,783 points. In Europe, the FTSE 100 lost 0.11% and Germany’s DAX 0.26%.

The rand held steady on the day, touching an intraday best of R18.63 to the dollar. At 5.38pm on Friday, the rand was little changed at R18.7217/$, R20.3809/€ and R23.8498/£. The euro was unchanged at $1.0886.