JSE firms on positive US jobs data

The JSE closed firmer on Tuesday as investors considered US jobs data and the prospects of higher interest rates for longer after a surprise cut in oil supply fuelled inflation fears.

Job openings in the US declined more than expected in February in what analysts believe could be a sign that the tight labour market is starting to loosen, Bloomberg reported.

The Job Openings and Labor Turnover Survey for February shows the largest decreases in job openings were in professional and business services, healthcare and social assistance, transportation, warehousing and utilities.

“The Federal Reserve has hiked interest rates nine consecutive times in an effort to cool historically high inflation, which has been boosted in part by rising wages,” said SPI Asset Management managing partner Stephen Innes. “The job openings data were the first look at the labour market for investors this week. Jobless claims on Thursday and the US jobs report for March on Friday will provide more insight as to the current state of both the labour market and the economy,” he said.

“The Fed might see Tuesday’s data as a sign that the mismatch between supply and demand of labour is slowly resolving, meaning less potential inflation pressure. However, investors could be concerned about the economy weakening as the jobs market slows.”

The JSE all share gained 1.1% to 77,458.58 points and the top 40 added 1.04%. Precious metals jumped 4.05%, resources 1.57%, and retailers 1.52%,

At 6.51pm, the Dow Jones industrial average was 0.75% weaker at 33,349.49, while markets in Europe were mixed.

The surprise decision by Opec+ to cut crude output by 1.16-million barrels a day from May and the resulting prospect of higher oil prices added more uneasiness to financial markets that are still contending with persistent inflation and higher interest rates, while recovering from the mini banking crisis.

The Opec+ decision saw oil prices jump above $85 a barrel and had many economists reassessing their outlooks for inflation and interest rates, said RMB market macroeconomist Siobhan Redford.

“The risk for Opec is that it is cutting production at a time when the global economy is slowing and the outlook for China is uncertain, which may accelerate the demand pullback in the latter part of 2023,” he said.

At 6.06pm, the rand had weakened 0.73% to R17.9365/$, 1.14% to R19.6307/€ and 1.39% to R22.4195/£.