JSE all share hovers at record high

The JSE closed little changed on Thursday as investors weighed strong corporate earnings in the US and the implications of the tighter monetary policy by the Federal Reserve.

Despite the muted session, the JSE all share hovered around a record high and above 76,000 points as investors welcomed strong earnings from American companies.

“The pause in the global sovereignbond sell-off and investor focus on corporate earnings means global equities are having a mixed session,” said Oanda market analyst Craig Erlam.

“Earnings could be what helps equities find some form again. The key thing, however, will be whether we see a pause in interest rate expectations after weeks of aggressively pricing in more hikes,” Erlam said.

The JSE all share was little changed at 76,233.26 points, while the top 40 was 0.11% firmer. Precious metals and telecommunications were biggest sectoral gainers, rising 4.01% and 1.07%.

At 6.10pm, the Dow Jones industrial average was 1.26% firmer at 35,470.85, and the broader S&P 500 had added 1.42%. Markets were mixed in Europe and Asia.

The Fed meets next week to discuss monetary policy and markets are indicating a slight chance of action on interest rates. However, markets have fully priced in a 25 basis point hike in March, which would be the first of four increases through 2022.

Mounting expectations of rapid Fed tightening have dominated market sentiment so far this year, but not all central banks are on the same page.

The People’s Bank of China followed Monday’s surprise cuts to its short- and medium-term lending rates by reducing home-loan benchmark rates on Thursday. Bank of Japan governor Haruhiko Kuroda said this week that “raising rates is unthinkable”, while officials at the European Central Bank are pushing back on market expectations for a rate hike as early as September. ECB president Christine Lagarde has said they have “every reason not to react as quickly” as the Fed.

In SA, the Reserve Bank’s monetary policy committee (MPC) is expected announce a hike in the repo rate on Thursday. “The MPC has been sounding more hawkish than dovish as last year progressed and appears very keen to continue to remove monetary accommodation,” said Investec chief economist Annabel Bishop.

At 5.57pm, the rand had strengthened 1.32% to R15.1203/$, 1.16% to R17.1565/€ and 1% to R20.6479/£. The euro was flat at $1.1348.