MARKET WRAP: JSE weaker as investors assess US jobs data

The JSE closed weaker on Friday, pulled lower by metals, as investors assessed the US monthly non-farm payroll report.

The world’s biggest economy added 199,000 jobs in November, more than the 190,000 market estimates, while the unemployment rate eased to 3.7% from 3.9%.

November’s number got a boost from tens of thousands of autoworkers and actors returning to work from strikes, but the upside surprise shows there’s still strength in the US labour market, reported Bloomberg. 

Looking to March, which is when many economists expect to see the US Fed start to cut rates, odds that the Fed will cut rates by 25 basis points from current levels have dropped to 45% from 55%, according to data from the CME Group. 

“US Treasury yields soared following the report, while the dollar strengthened on signs that the labour market may not be cooling as quickly as many had initially thought,” said FXTM senior research analyst Lukman Otunuga. 

“This week’s data indicated that the labour market was cooling and the Fed’s fight against inflation is paying off. However, Friday’s report showing the labour market remaining resilient will pose a challenge for stocks, which [recently] rallied on optimism that the rate hikes have peaked and a soft-landing could be achieved,” said Otunuga.

“Next week’s inflation numbers will be the next data for investors to focus on for more insight.”

The JSE all share lost 1.33% to 73,790.85 points and the top 40 eased 1.53%. Retailers gained 0.85% and industrials 0.61%. Industrial metals dropped 9.16%, resources 5.92%, banks 0.92%, precious metals 0.75% and financials 0.47%.

The fall in the industrial metals index came after Anglo American tumbled the most since 2009 after it announced substantial spending and production cuts over the next three years. Its shares closed 13.32% lower at R455.68, wiping R93bn off its market value.

At 6.04pm, the rand had weakened 0.62% at R18.9297/$, 0.59% to R20.3829/€ and 0.37% to R23.7425/£. The euro was down 0.25% at $1.0768.

Meanwhile, the latest University of Michigan consumer sentiment survey, the one-year outlook for the inflation rate, slid to 3.1% from 4.5% in November. The five-year outlook also moved lower, to 2.8% from 3.2% the previous month.

At 6pm, the Dow Jones industrial average was little changed while  in Europe, the FTSE 100 added 0.57%, France’s CAC 40 1.51% and Germany’s DAX 0.85%.

Gold was down 1.09% to $2,005.84/oz, while platinum gained 1.32% to $918/oz. Brent crude rose 2.03% to $76.01 a barrel.

tsobol@businesslive.co.za