JSE jumps, with Naspers up 9%, as investors shrug off US inflation data

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Financial stock exchange market display screen board on the street
Financial stock exchange market display screen board on the street

Stock markets rose and the dollar fell against most currencies Wednesday despite figures showing US inflation rising at its fastest pace since June 1982.

The US consumer price index (CPI) jumped 7 percent in 2021, the highest increase since June 1982, adding pressure on authorities to tame surging inflation wave brought on by the pandemic and response efforts.

But investors appeared to take the data in their stride after Federal Reserve chief Jerome Powell indicated Tuesday he was ready to raise interest rates while trying to preserve the US recovery from the Covid-19 crisis.

The JSE's All Share Index was up almost 3%, with Naspers gaining more than 9% to R2 673.44. The rand was almost 2% stronger at R15.38.

US and European stocks all pushed higher after the inflation data, with the tech-rich Nasdaq, which had been particularly jittery at the start of the year, rising 1.0 percent at the start of trading.

"It looks like the market had prepared for even hotter inflation, which obviously didn't materialise. So the reaction can best be described as relief," said Fawad Razaqzada, an analyst at ThinkMarkets.

Fears of an abrupt end to the ultra-loose monetary policies, which have helped power a two-year market rally, made for a torrid start to trading this year. But on Wednesday, the mood appeared resolutely upbeat.

European and US markets appeared sanguine about the price rises in the world's biggest economy after Powell's reassurances on Tuesday.

Meanwhile, data out of China on Wednesday showed inflation in that country had eased, handing Beijing room for measures to kickstart the stuttering economy including interest rate cuts, according to analysts.

Prices are currently rising at their fastest pace in decades owing to a number of pressures including surging wage growth, supply chain snarls and high energy costs.

Oil prices also rose on Tuesday whereas the dollar was down.

While most observers expect equities to endure some tough times in the near future, they remain broadly upbeat about the outlook for this year.

"It would appear relentless optimism is perhaps returning to the markets and dip buyers are diving back in, Craig Erlam, senior market analyst at Oanda, wrote in a note to clients.

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