JSE. Picture: FREDDY MAVUNDA
JSE. Picture: FREDDY MAVUNDA

The JSE could have a rough session on Thursday, given the decidedly weaker performance in Asia where Japan’s Nikkei 225 and Hong Kong’s Hang Seng slid 1.8% and 1%, respectively.

Markets are on edge amid the acceleration in consumer inflation in the US, which could lead the Federal Reserve to raise interest rates sooner than initially thought.

“The commentary from the US Federal Reserve that inflation is transitory, as well as their commitment to keeping interest rates low for an extended period, may have to be reconsidered on the back of incoming data,” said Lester Davids, investment strategist at Unum Capital.

Higher interest rates in the US have the potential to suck capital from emerging markets in particular.

US inflation accelerated to an annual rate of 4.2% in April, the most in 12 years, triggering a rise in US treasury yields, which boosted the dollar to the detriment of other currencies.

The rand, which tends to overreact when global sentiment is weaker, was relatively resilient against the strong dollar at R14.11/$, though pulling from a 16-month high of R13.96/$ touched earlier in the week.

The underlying strength in commodity prices, which have boosted foreign exchange earnings of mining companies, has supported the local currency.

Commodity prices were mostly higher in early trade, with the spot price of platinum gaining 0.25% to $,1,216.60/oz, but Brent crude shed 0.54% to $68.60 a barrel. 

mahlangua@businesslive.co.za

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