Local and foreign fears knock market
SHARE prices weakened on the JSE on Friday, capping a week largely dominated by global forces and as local political worries resurfaced, leading to a brief sell-off in local assets.
The closely watched US nonfarm payrolls report issued on Friday was mixed, leading to a fair amount of volatility, particularly in the currency market.
US employers created 227 000 jobs last month, easily beating market forecasts of 175 000. But wage growth, which the Federal Reserve takes into account when deciding on interest rates, slowed, suggesting slack in the US labour market.
“The latest employment report is once again encouraging, despite the slightly disappointing wage growth data,” Stanlib economist Kevin Lings said. “Overall, the . . . labour report has not altered our general outlook for US economic growth, inflation and interest rates.”
The dollar lost steam in late trade after an initial positive reaction to the data. This in turn gave the rand a boost, and it rallied to a day’s high of R13.21/$ from lows of R13.50/$.
Dollar weakness suggests the Fed will be less aggressive in its approach to raising rates. The market expects it to tighten monetary policy at least three times this year.
The report came against the backdrop of mounting concern about President Donald Trump’s isolationist and protectionist rhetoric, which some analysts say could harm global trade.
Robert Group investments head Devin Shutte said political risks were elevated, abroad and locally.
“As we move to the state-ofthe-nation address and the budget later this month, the market will be watching closely for possible signals regarding any key ministerial changes or significant policy shifts.”
The rand and bond market wobbled early in the week after the Sunday Times reported that former Eskom CEO Brian Molefe might replace Finance Minister Pravin Gordhan.
The all share eased 0.86% to 52 265.20 points, weighed down by resources stocks.