The JSE could have another decent session on Friday, which will bring the all share index within striking distance of a record high, after an eventful week for the financial markets.

The rand held broadly against the dollar in early trade at R15.29/$, but a lot weaker compared with the beginning of the week when it changed hands at R14.92/$, reflecting the wild swings that have characterised SA’s currency since mid-August.

The rand’s erratic behaviour has corresponded more to perceptions of a change in US monetary policy than to domestic factors such as chronic power shortages, which could potentially choke the fragile economic recovery.

Earlier in the week, markets began to speculate that the US Federal Reserve could raise interest rates soon after winding down its huge bond-buying programme in June-July 2022. US consumer inflation hit a three-decade high in November, raising criticism that the Fed could be behind the curve in reigning in rising prices.

US inflation rose at an annual rate of 6.2% in October, beating markets forecasts. But Fed chair Jerome Powell has until now been consistent in saying price pressures will be temporary.

“The Fed may ultimately prove to be correct in its judgment that pressures will ease naturally over time as they’re broadly driven by temporary factors. But how long can they afford to stand by and watch inflation dramatically overshoot their target? Are they really that confident in their assessment? The pressure is intensifying,” said Craig Erlam, senior market analyst Oanda.

Elsewhere, commodity prices were weaker, with Brent crude, which continues to be focal point in terms of the inflation scenario, losing 0.41% to $81.21 per barrel.

Asian markets were broadly higher on Friday, with Japan’s Nikkei 225 gaining 1.05%. The JSE may follow suit, though gold and platinum counters could take the shine off the local share market, having run pretty hard this week.



Would you like to comment on this article or view other readers' comments?
Register (it’s quick and free) or sign in now.

Speech Bubbles

Please read our Comment Policy before commenting.