Rand Down On Cooling US Inflation Data

  • Market Overview

On Tuesday, the JSE All Share tracked Chinese and Hong Kong markets down, closing 0.54% lower as gains by banks and financials were offset by miners and industrials. The rand also tumbled on the release of US inflation figures, data investors monitor as an indicator of when the US Federal Reserve (Fed) could taper stimulus. The annual inflation rate eased slightly to 5.30% in August 2021 from 5.40% reported in June and July of this year and to 0.10% from 0.30% m/m over the same period.

Wall Street opened strong on news that CPI dropped to its lowest level in seven months, easing investor fears about the Fed reducing stimulus early. The hype around US inflation was short-lived in Europe, with markets flat after Covid-19 concerns in Asia weighed heavily on luxury shares. The STOXX Europe 600 Index ended the day 0.01% lower on 467.65 points.

Indices in China and Hong Kong lost ground on the back of poor performances from tech, financials, and real estate “after China’s most indebted developer warned of a risk of a cross-default”. In Tokyo, the Nikkei continued to enjoy its over 31-year high, boosted by cyclical counters, overnight Wall Street profits, and optimism around their domestic vaccine programme.

Spot gold reached a one-week high as the cooling US inflation figures weighed on the greenback. Although tropical storm Nicholas brought heavy rains and power outages to the Gulf’s oil facilities, it caused less damage than Hurricane Ida and left Brent crude largely unchanged. The Bureau of Safety and Environmental Enforcement (BSEE) confirmed that over 39% of the Gulf of Mexico’s crude and natural gas production facilities remained shut.

PSG Wealth Daily Investment Update, 15 September 2021

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