JSE, rand surge on US prices stats

The JSE staged a sharp rebound in the afternoon session on Thursday, while the rand powered on after the US reported better-than-expected inflation data, raising hopes that price rises have peaked and have prompted the Federal Reserve (Fed) to ease up on aggressive rate hikes.

US consumer prices rose 7.7% year on year in October, well below market expectations of 7.9% and the slowest pace in nine months. The core consumer price index, which excludes volatile food and energy costs, rose 0.3% in the month and 6.3% on an annual basis, also 20 basis points below the consensus figure.

“This inflation report was a nice surprise. Inflation has been very slow to come down, but this report gives us hope that this deceleration with pricing pressures might bring back hopes of a soft landing,” said Oanda senior market analyst Edward Moya.

“Markets are seeing light at the end of the Fed’s tightening cycle tunnel and practically every risky asset is rejoicing ... King dollar has left the building after a soft inflation report cemented the Fed’s downshift to a slower pace of tightening and revived hopes of a soft landing,” Moya said.

“The price reaction to this inflation report was a bit excessive, but could be justified if the next couple of inflation reports are just as cool.”

The JSE all share gained 1.54% to 70,710 points after spending most of the day in the red, while the top 40 was 1.68% firmer. Only oil, coal and gas, and leisure and travel were lower on the day, shedding 2.29% and 0.61%, respectively.

The rand firmed to R17.40/$, the strongest level since September 14, and by 6.18pm, it was 1.85% firmer at R17.43564/$ and 0.18% to R17.7372/€. It was 0.81% weaker at R20.3526/£. The euro had firmed 1.67% to $1.0173.

Tech stocks, which have been the hardest hit this year amid the market turmoil, led the gains in premarket in the US, while Naspers and Prosus were also among the top gainers on the local bourse, gaining 4.54% to R2,201.79 and 3.96% to R903.29, respectively.

At 7.36pm, the Dow Jones industrial average was 2.74% higher at 33,404.93 points. European markets also rebounded from session lows, with London’s FTSE 100 closing 1.08% higher and Germany’s DAX jumping 3.51%.

Among commodities, gold was 2.24% at $1,743.81/oz, while platinum surged 4.3% to $1,028.10/oz. Brent crude was 1.12% firmer at $93.39 a barrel.