JSE could break losing streak on Wednesday as Asian markets recover

The JSE could follow recovering Asian markets on Wednesday morning, which have been cheered by indications of easing Chinese Covid-19 restrictions, with all eyes on the US Federal Reserve later.

A surge in infections in the world’s largest economy, as well as new restrictions on online activities for minors, has weighed heavily on markets this week, which were already under pressure due to the war in Ukraine.

Reports have suggested that China is considering shifting its strict approach to the pandemic, helping to lift the Hang Seng 2.5% in early trade, while Japan’s Nikkei was up 1.4%.

Tencent, which influences the JSE via the Naspers stable, had surged 7.5%, but has still lost about a fifth over the past week.

Volumes were understandably light, along with a low appetite for outlaying new risk into Wednesday’s main event, the US Federal Reserve’s announcement, SPI Asset Management managing partner Stephen Innes said in a note.

The Fed is expected to raise interest rates by 25 basis points later on Wednesday, the first increase since 2018, with further hikes expected through the course of the year.

The Fed’s indication of the level of interest rates it expects at the end of its tightening cycle will be an important point of focus, given the US economy is battling with inflation at a 40-year high, even as energy costs surge and supply-chain issues persist.

Gold was flat at $1,915.47/oz while platinum had risen 1.22% to $995. Brent crude was 2.31% higher at $100.86 a barrel.

The rand was flat at R15.11/$.

Food and goods group Libstar is due to report its results for the year to end-December later. It said in a recent update that core profit growth from continuing operations had slowed, reporting lower export margins and pressure from rising input costs.

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