The JSE dithered on Wednesday amid the ongoing sell-off in commodity shares, suggesting that investors are still cautious about economic recovery in China, which is traditionally the single biggest consumer of commodities.
The all share index was relatively flat at 73,795.07 points at midday. But the precious metals and mining index slipped 0.32%, continuing its 12.5% slide so far in 2024. The resource 10 index rose modestly but is still down nearly 10% since the turn of the year.
The JSE is “being dragged down by heavyweight resource shares, which continue to come under pressure on the back of concerns about the Chinese economy”, said Lester Davids, analyst at Unum Capital.
“In addition, the stabilisation in the dollar has added to the pressure for selected commodities. Going forward, the expectation is that Chinese officials would support the economy, which could bring some relief to China-related sectors/names. Until then, it’s a dollar and China story.”
The slight rebound in the dollar has exerted pressure on commodity prices and miners following the moderation in market optimism that the US Federal Reserve will cut interest rates in 2024.
Mega-cap industrial shares were moderately higher, countering the drop in mining counters.
Europe’s leading markets turned positive after opening weaker on Wednesday, following the broader weaker session in Asia. However, Japan’s Nikkei 225 was an outlier, gaining 2% to close its highest level since 1990.
The release of December US consumer inflation figures on Thursday is likely to dominate global market psychology as far as it relates to the outlook for interest rates.