JSE to contend with mixed Asian markets on Friday as investors mull Fed’s next move

The JSE looks set to contend with a mixed picture in Asia on Friday morning, but is still on track for a good week, as investors mull just how aggressive the US Federal Reserve will be in fighting inflation.  

US consumer inflation for January came in higher than expected on Thursday, at 7.5% year on year, boosting expectations the Fed will need to accelerate monetary policy tightening.

The inflation print has prompted hawkish commentary from at least one Fed official, while pricing for a 50 basis move in March has also lifted to 85% from only 30% on before the inflation data, National Australia Bank analyst Tapas Strickland said in a note.

The data prompted a sell-off of US bonds, and put markets there under pressure, with the tech-heavy Nasdaq falling more than 2%.

Local focus was on the state of the nation address on Thursday, which took place after the market close, but there was very little that was new in the speech, according to Intellidex head of capital markets research Peter Attard Montalto.

There was no announcement of a basic income grant, yet the need for support and the path towards one was clear, said Montalto. The market seems to be underestimating the tension between the presidency and Treasury over budgeting, something that should show up in the budget through a slightly greater loosening of expenditure constraints than expected, he said.

The JSE had slipped a little on Thursday, but is still on track for a good week, and needs to lose more than 1.8% to close where it did last Friday.

In morning trade the Hang Seng was flat and the Shanghai Composite had gained 0.34%, while Australia’s All Ordinaries index had given back 0.74%.

Gold was down 0.14% to $1,824.60/oz while platinum had fallen 0.48% to $1,021/oz. Brent crude was 0.3% weaker at $91.13 a barrel. 

The rand was 0.43% weaker at R15.22/$.

Both the local corporate and economic calendars are bare on Friday.

gernetzkyk@businesslive.co.za