Financial markets are uncertain after a month of rapid growth - Chris Harmse

THE All Share index on the JSE on Friday ended lower, but for the week in line with global equity prices given the uncertainty if the US will still lower its’ Federal Bank rate in September.

- CHRIS HARMSE

This after the dovish speech the previous Friday by Federal Reserve chairperson, Jeremy Powell, at the annual US Economic Policy Symposium in Jackson Hole, where he has indicated that there is now a greater possibility for US interest rates to be cut at Fed’s next meeting in September. The more profound US inflation measure the Personal Consumption Expenditure (PCE) price index that was released last week showed an increase of 2.7% in July and is now much higher than the 2.0% target of the US Federal Reserve. Global share markets now expects that the effect of the Trump tariffs that were imposed at the beginning of August will put upward pressure on this index. Investors are now worried that a cycle of stagflation, namely lower growth with inflation and increasing unemployment, may hurt company profits.

Market players believe that the non-farm payrolls for August that will be released this coming week will indicate a slowdown in US economic activity if less than expected new jobs of 75K were created and the unemployment rate increased by 4.3%, up from 4.2% in July, will indicate stagflation process started.