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JSE slips amid US inflation jitters

Lindiwe Tsobo Markets Writer tsobol@businesslive.co.za

The JSE closed weaker amid mixed global markets on Thursday as investors digested worse-thanexpected US consumer price data.

Fears that inflation will rise as the global economy recovers from the Covid-19 pandemic have been a theme in the market so far in 2021, but came sharply into focus this week.

CNBC reported traders across the board cited a rise in interest rates, triggered by a hotter than expected inflation report, for the midweek slump.

The JSE all share extended losses on Thursday, falling the most in more than two months, dragged lower by miners and tech stocks.

“US inflation jumping to its highest level in years has spooked the market, while a sell-off in commodities is giving the bears more room to run. The data confirmed investors’ fears of the economy overheating and prompted bets that the US Federal Reserve [Fed] could move on rates earlier,” Oanda market analyst Sophie Griffiths said.

The JSE all share lost 1.86% to 66,168.65 points and the top 40 2.14%. Industrial metals dropped 3.79%, resources 3.05%, precious metals 1.81%, industrials 1.30%, banks 1.13% and financials 1.07%.

African Rainbow Minerals led the losses in the industrial miners’ sector, falling the most in more than seven weeks, down 5.20% to R275.32. Kumba Iron Ore fell 4.33% to R686.33, its biggest losses in almost eight weeks.

Naspers fell for the fourth consecutive day, down 3.31% to R3,020.55, while Prosus lost 2.26% to R1,433.42.

“Inflation fears have been stalking the market all week and are showing few signs of easing. While some inflation is good for companies and the market, the latest US consumer price data points to the balance moving too far in one direction,” said Griffiths.

Whether price pressures prove to be a transitory risk, as the Fed officials have consistently said, “will continue to be a central question for markets, as will bets on when the Fed may hike rates and on how long it could take for inflation readings to settle down,” said Axi global chief market strategist Stephen Innes in a note.

Earlier, the Shanghai Composite fell 0.96%, Hong Kong’s Hang Seng 1.71% and Japan’s Nikkei 225 2.49%.

At 5.35pm, the Dow Jones Industrial Average was little changed at 34,042.58 points.

At 5.11pm, the rand was little changed at R14.1097/$ and R17.0318/€, while it had strengthened 0.18% to R19.8097/£. The euro was unchanged at $1.2071.

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2021-05-14T07:00:00.0000000Z

2021-05-14T07:00:00.0000000Z

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