JSE Rallied Ahead of the First Inflation Report for the Year

Published 2025/01/22, 08:18

US stocks advanced on Tuesday, with all three major indices rising nearly 1%. This followed softer-than-expected signals of trade disruption from President Donald Trump after his first day in office. While Trump indicated plans for tariffs on Mexico and Canada, he refrained from announcing restrictions on China, reducing concerns over inflation and a potential hawkish response from the Federal Reserve (Fed).

In South Africa, the FTSE/JSE All Share Index gained 0.13%, maintaining its upward momentum as investors digested the implications of Trump’s inauguration. The rand strengthened, trading at R18.51/$ by 18h00 local time. Attention now turns to the inflation rate release expected later today.

European stocks showed mixed performance on Tuesday as traders evaluated the potential impact of Trump’s policies on the region. The Eurozone’s STOXX 50 held steady at 5 166, near a two-year high, while the pan-European STOXX 600 added 0.40% to reach a record 526. Although Trump initially delayed the imposition of tariffs, he later revealed a plan to introduce tariffs of up to 25% on Mexico and Canada, set to take effect on 1 February 2025. This move reignited concerns over escalating trade tensions and potential inflationary pressures. At the same time, Germany's ZEW investor sentiment dropped, and the UK saw a slight increase in its unemployment rate.

In Asia, the Hang Seng climbed 0.90% to close at 20 107, marking its sixth consecutive session of gains and nearing a four-week high amid sector-wide strength. Markets responded positively to Trump’s inaugural speech, which excluded tariffs in China. US futures also surged following executive orders signed by Trump, including a declaration of a national energy emergency aimed at reducing inflation and potentially prompting further Fed rate cuts. However, caution prevailed ahead of Hong Kong’s December inflation data. Elsewhere, Japan’s Nikkei rose 0.32% to 39 028, and the Topix Index edged up 0.08% to 2 714, continuing gains spurred by relief that Trump did not impose new tariffs immediately, alleviating concerns for Japanese exporters.

Brent crude oil futures hovered around $79 per barrel on Tuesday as traders processed Trump’s executive orders following his inauguration. While specific tariffs on China, the world’s largest oil importer, were withheld, markets remained cautious. Investors are also watching for updates on sanctions targeting major oil exporters like Russia, Iran, and Venezuela. On Monday, crude prices fell over 1% after Trump declared a national emergency to boost US oil and gas production.

PSG Wealth Daily Investment Update, 22 January 2025


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