JSE gains for sixth day running

The JSE gained the most in 10 days on Friday, rallying along with its global peers as a softer US jobs report revived investor hopes of interest rate cuts by the Federal Reserve.

The all share index gained for a sixth straight session, with stronger GDP growth in China also providing a boost.

This week’s jobs data showed more Americans than expected filed for unemployment benefits in the previous week, making the recorded number the largest print for weekly jobless claims since August.

That and the recent weaker-thanexpected nonfarm payrolls (NFP), are regarded as one of the first notable cracks in the resilient job market, raising the expectation that the Fed might cut interest rates in 2024.

Despite some Fed officials sticking to the higher-for-longer interest rates narrative, the gains in equity markets over the past week are also supported by Fed chair Jerome Powell’s more dovish tone at last week’s policy meeting. That soothed market fears after a series of hot inflation readings raised alarms about the path of interest rates, reported Bloomberg.

“The unexpected surge in initial jobless claims has fuelled expectations of an pending interest rate cut by the Fed, with markets now pricing in a 69% probability of a reduction in September,” Citadel Global director Bianca Botes said.

The JSE all share gained 1.19% to 78,464 points on Friday, its highest close since August, with the top 40 adding 1.18%. The all share’s gains for the week amounted to 2.66%.

At 5.50pm, the Dow Jones industrial average was 0.25% firmer at 39,487 points, while markets in Europe also gained.

Investors will continue watching several Fed officials’ comments for any clues on the central bank’s interest rate outlook. Among those that were expected to speak on Friday were governor Michelle Bowman, Dallas Fed president Lorie Logan, Chicago Fed president Austan Goolsbee, Minneapolis president Neel Kashkari, and Michael Barr.

Botes said investors would continue to monitor signals from the Fed closely, the SA Reserve Bank was expected to maintain elevated interest rates amid persistent inflationary pressures and uncertainties surrounding the outcome of the general election. “This cautious outlook has led analysts to consider the possibility of no local rate cuts this year.”

The rand pared gains on the day, having touched a best level of R18.3725/$. At 6.25pm, it had strengthened 0.24% to R18.4322/$ and 0.28% to R19.8602/€. It was flat at R23.0996/£. The euro was little changed at $1.0745.