JSE likely to edge higher in line with global markets

The JSE is likely to have a positive session on Friday, taking its lead from world markets, which largely bought the argument that the acceleration in US consumer inflation will be temporary.

The US Federal Reserve has previously indicated that higher inflation will be transitory, implying that it will not scale back its loose monetary policy.

The yield on the benchmark US Treasury note dipped to its lowest point since March at about 1.44%, despite US consumer price index (CPI) rising to an annual rate of 5% in May, the highest since 2008, from 4.2% in April

The drop in US treasury yields boosted demand for equities, with the S&P 500 closing at record highs.

Asian markets were mostly higher, with Hong Kong’s gaining 0.41% and Australia’s ASX/200 gaining 0.26%.

“One would have expected US yields and the greenback to rise and equities to fall. Instead precisely the opposite happened leaving many disappointed inflationists scratching their heads, including those with pointy ears mumbling about how illogical humans are,” said Jeffrey Halley, senior market analyst at Oanda.

The rand also benefited from the rally in global markets in the US session, though it was steady in early trade at R13.57/$.

Commodity prices were mostly higher, but the spot price of Brent crude was flat at $72.35 per barrel, hovering near a two-year high.

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Source: businesslive.co.za