JSE likely to take a breather after hitting fresh records

The JSE could pause for breath on Thursday after the all share index raced to a fresh record.

But the near-term outlook for share markets appeared broadly positive after US Federal Reserve chair Jerome Powell said earlier this week that higher US consumer prices would likely taper off from June, lessening the probability of aggressive increases in interest rates.

The rand, which is the proxy of sentiment towards emerging currencies because of its highly tradable status, paused in early dealings after rallying to its best level since mid-November at about R15.30/$.

As expected, US consumer inflation rose at an annual rate of 7% in December, the highest in nearly four decades, from 6.8% in November, the data showed on Wednesday. But the immediate market reaction was muted, with benchmark US 10-year yields dipping and pressuring the dollar. The yields on US 10-year paper last stood at 1.7446%.

Asian stocks were mixed in early trade, with Japan’s Nikkei 225 index dipping 0.87% and Hong Kong’s Hang Seng slipping 0.17%.

Commodity markets were moderately lower in early trade, implying that JSE-listed commodity shares could dip after a strong session on Wednesday in which Anglo American and BHP scaled record highs.

However, Nedbank economists said in a note that global risk appetite is expected to be choppy as the year progresses, affected by a mutating Covid-19 virus, rising global inflation and higher US rates expectations

 “These uncertainties are likely to subdue risk appetites for emerging-market assets, weighing on the rand. Weaker commodity prices and a reversal in the trade balance will add further downward pressure. We expect the rand to depreciate moderately during 2022.” 

mahlangua@businesslive.co.za