Picture: FREDDY MAVUNDA
Picture: FREDDY MAVUNDA

The JSE is likely to edge lower on Tuesday, taking a breather after the all share index hit the 75,000-point mark for the first time last Wednesday.

The potential mild retreat in the all share is in step with global markets that started the year on a positive footing, despite the overhang of Omicron variant that drove a surge in new cases in Australia and the US.

Uncertainty on the outlook for US inflation is another theme that is driving market psychology. US inflation has been running the Fed’s 2% target for months, increasing chances of steeper increases in interest rates to curb price pressures.

The US consumer price index is expected to have accelerated to an annual rate of 7.1% in December, according to a Bloomberg median estimate, from 6.8% in November. Core inflation, which strips out volatile food and energy, is likely to have risen 5.4% year on year from 4.9%. The US data is out on Wednesday.

Fed chair Jerome Powell will later on Tuesday give some colour on how the US central bank perceives inflation trajectory when he testifies before Congress. The likely increases in rates in the US could draw capital away from emerging markets are invariably perceived risky though they offer yields/returns compared with their developed counterparts.

The rand, which is a barometer of sentiment towards emerging markets, was steady at R15.67/$ in early dealings. Commodity prices were well supported, with Brent crude edging up 0.35% to $81.27 a barrel.  Platinum was up 1% to $953.75/oz, while palladium rose 0.78% $1,933.50/oz.

mahlangua@businesslive.co.za

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