JSE faces buoyant Asian markets on Thursday as SA digests budget

The JSE faces stronger Asian markets on Thursday, with US markets doing well overnight, after US Federal Reserve chair Jerome Powell downplayed the threat of inflation during testimony before Congress.

Powell emphasised that employment targets were some way off, and that the Fed would remain accommodative. Global markets have been under pressure of late as investors consider the threat of rising inflation as the post-pandemic economic recovery gains momentum.

Locally, the JSE and rand pared gains after the budget announcement, but analysts said overall that promises of addressing debt, while not raising taxes, was positive.

SA’s fiscal position in the 2020/2021 fiscal year is shaping up to be less dire than feared, fuelling an optimistic tone from finance minister Tito Mboweni, Capital Economics Africa economist Virág Fórizs said in a note.

It will, however, remain politically challenging to maintain expenditure restraint, given the weak economic backdrop, and the outlook for SA’s finances were probably not a rosy as Mboweni suggested, said Fórizs.

“It’s notable that the language around a planned contentious public sector pay freeze, which formed the bulk of the expenditure restraint outlined in last October’s medium-term budget policy statement, has been changed to ‘fair negotiations’ over wages,” she said.

The rand was 0.23% weaker at R14.51/$ on Thursday, on track to break a three-session winning streak.

In morning trade, the Hang Seng had jumped 2.16% and the Shanghai Composite 1.09%.

Tencent, which gives direction to the market via Naspers, had gained 2.98%.

Gold was down 0.42% to $1,797.30/oz while platinum had fallen 0.46% to $1,260.64. Brent crude was 0.12% weaker at $67.20 a barrel, having surged 3.32% on Wednesday.

Impala Platinum is scheduled to report later that headline earnings more than quadrupled in its six months to end-December, amid robust prices for platinum group metals.

Insurance group Discovery is due to expected to report a decline in headline earnings in its six months to end-December, and said in a recent trading update that it had increased provisions. However, it flagged a rise in normalised profit from operations.

Packaging group Mondi is due to release its full-year results to end-December later. It has not recently issued a trading statement, but it has said its performance in its third quarter was resilient.

Woolworths is due to report its results for the half year to December 27 later, expecting a rise in headline earnings, largely driven by a strong performance of Woolworths Food.

[email protected]