JSE could get boost from soothing Fed signals on Wednesday

The JSE looks poised for a positive session on Wednesday morning, with global markets lifting in the wake of testimony from US Federal Reserve chair Jerome Powell before Congress on Tuesday.

Powell has emphasised that the US economy is no longer in need of substantial stimulus, further playing down the expectation of rapid interest rate increase in early 2022, as the labour market in the world’s largest economy recovers. The Fed, however, will act to rein in inflation, which poses a threat to jobs, he said.

The prospect of less accommodative monetary policy has weighed on global markets so far this year, with policymakers grappling with high inflation rates that are proving a little more persistent than expected.

“It was a masterful performance really, leaving the bowls neither too full nor too shallow; but just right from the financial market’s perspective,” Oanda senior market analyst Jeffrey Halley said in a note.

Chinese inflation for December came in under expectations earlier on Wednesday, while tech stocks were faring well, having been sold off recently as investors contemplate higher future borrowing costs.

In morning trade on Wednesday, Tencent, which can give direction to the JSE via Naspers, was up 3.22%.

The Hang Seng had 2.13%, Japan’s Nikkei 1.87% and the Shanghai Composite 0.35%.

Gold was 0.14% weaker at $1,818.46/oz while platinum gave back 0.28% to $969. Brent crude was 0.19% lower to $83.60 a barrel.

The rand was 0.16% firmer at R15.50/$, its best level in about two months, and having gained more than 1% on Tuesday.

The local calendar is bare on Wednesday, with global focus now shifting to the US consumer inflation report for December, expected at 3.30pm SA time. Expectations are that year-on-year inflation accelerated to 7% in December, from 6.8% previously, its highest in about four decades.

gernetzkyk@businesslive.co.za