The JSE Strengthens Prior to the US Jobs Report

Published 2024/06/07, 08:44
UK100
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STOXX50
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JP225
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ANTO
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ASML
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FTMC
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OCDO
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SSEC
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STOXX
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TOPX
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CFRJ
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GFIJ
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PANJ
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SPPJ
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TGAJ
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Thursday saw the JSE edging up by about 0.40% to close at 77 124, rebounding after two consecutive sessions of decline. Traders exhibited caution ahead of a crucial US jobs report due today. Concurrently, fresh labour market data heightened expectations of the Federal Reserve initiating rate cuts as early as September. On the domestic front, South African President Cyril Ramaphosa and senior ANC officials convened for a pivotal meeting on Thursday, deliberating whether to formally propose a "government of national unity" inclusive of major parties, amidst evident divisions. In terms of individual stocks, the leading performers were Gold Fields (JO:GFIJ) (2.60%), Pan African Resources (JO:PANJ) (2.25%), and Richemont (JO:CFRJ) (2.20%). Conversely, Thungela Resources (JO:TGAJ) and Spar Group (JO:SPPJ) experienced the most significant declines, falling by 3.34% and 3.07%, respectively.

In global news, the three major US indices hovered around the flatline on Thursday, following the record highs set by both the S&P 500 and the Nasdaq the preceding day. Market participants awaited further developments to evaluate the monetary policy outlook. Initial jobless claims exceeded expectations last week, and Q1 labour costs were revised downward, signalling the Fed's potential for interest rate cuts this year. The eagerly anticipated jobs report is scheduled for release today. Real estate, materials, utilities, and health sectors underperformed, while tech and consumer discretionary sectors showed resilience.

It proved to be a notable day for European markets, as equities extended gains on Thursday after the European Central Bank (ECB) implemented its expected key interest rate cuts, initiating the policy normalisation process following a historic tightening cycle. The Eurozone's Stoxx 50 gained 0.70%, closing near its 23-year peak reached last month, while the broader Stoxx 600 also surged 0.70% to a record-high close of 525. The ECB slashed its three main interest rates by 25bps as projected, but raised inflation forecasts and cautioned against further cuts due to upside risks to price growth. Tech shares continued to outperform, with ASML (AS:ASML) gaining 1.50%, extending its near 9% surge from the previous session following announcements of chip equipment sales to TSMC.

In the UK, the FTSE 100 mirrored the upward trend for the second consecutive session on Thursday after the ECB's decision to cut interest rates for the first time in five years. Antofagasta (LON:ANTO) saw a 1.50% increase after securing a $1.5b investment to enhance water supply in its Chilean mining operations. Conversely, Ocado (LON:OCDO) faced a decline of over 2% as it exited the FTSE 100, concluding a challenging year as the worst performer of 2024 and transitioning to the FTSE 250. In the FTSE 250, John Wood Group (LON:WG) excelled with an 8% rise following discussions with Sidara regarding a potential acquisition.

Across Asian markets, the Shanghai Composite dropped by 0.54% to close at 3 049, while the Shenzhen Component lost 0.57% to 9 340, with mainland stocks slipping to six-week lows amidst a dearth of positive catalysts, ahead of Chinese trade figures on Friday. Markets also awaited a pivotal Shanghai forum on Saturday where the country's top securities regulator is set to unveil capital market-related policy measures, fostering hopes for further policy support. In contrast, the Japanese Nikkei 225 Index closed at 38 703 with gains, while the broader Topix Index rose by 0.33% to 2 757, recovering some losses from the previous session and following a tech-led rally on Wall Street, which propelled major US indices to new record highs.

In commodities, WTI crude futures surged over 2% to $75.6 per barrel on Thursday, continuing their upward trajectory for a second consecutive day after hitting a four-month low of $73 on Tuesday. The rise was spurred by the ECB's inaugural interest rate cut in five years and speculation that the Federal Reserve would follow suit in September. Meanwhile, gold remained steady at $2 360 per ounce on Thursday, extending a slight rebound from the one-month low of $2 316 recorded two sessions earlier.

PSG Wealth Daily Investment Update, 07 June 2024

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