JSE faces lower markets as focus turns to US inflation data

The JSE is facing lower Asian markets, which are bracing for the latest inflation data from the US later on Thursday and digesting new Covid-19 cases and lockdowns in mainland China.

The Hang Seng in Hong Kong lost 1.86% on Thursday morning, the Nikkei in Japan 1.08% and the Shanghai composite in mainland China 0.53%. Year to date the Hang Seng is down 31.03%, the Shanghai composite 16.52% and the Nikkei 6.44%.

Tencent, which influences the JSE via Naspers and Prosus, was down 1.94% and has plunged 48.83% in 2022.

Shares tumbled in Hong Kong as the Covid-19 situation in mainland China dashed the hope of a possible reopening and dragged down market sentiment.

Other contributing factors in Asian markets were losses on Wall Street overnight, the hotly contested midterm election, uncertainty in crypto markets and investors bracing for new inflation figures from the US.

The latest data will give some indication if the aggressive interest rate hikes by the US Federal Reserve are taming inflation.

“US midterm election results have been rolling in and the outcome might not be known for several weeks. The Republican party hasn’t done as well as the pre-election polls suggested, making the race much tighter than expected,” Bank of New Zealand senior market strategist Jason Wong said in a note. “While the outcome looks much closer than expected, it is still probably in line with the policy gridlock scenario the market has been anticipating,” he said.

In local markets, the precious metals miners pushed the JSE higher on Wednesday while US and European markets were weaker, with investors there keeping a close eye on US midterm election results and Thursday’s inflation data firmly on the radar.

The JSE all share gained 0.91% to 69,640.23 points and the top 40 closed 0.41% firmer. Precious metals added 6.35% and resources 2.74%.

US markets retreated on Wednesday as the Nasdaq shed 2.48%, the S&P 500 2.08% and the Dow Jones 1.95%. The Nasdaq has lost more than one-third (34.61%) of its value so far this year, the S&P 500 one-fifth (21.85%) and the Dow Jones 11.13%.

The rand depreciated by 0.23% against the dollar, trading at R17.81 on Thursday morning. The rand has lost 11.63% against the greenback so far in 2022.

The prices of commodities are up, with platinum rising 0.56% to $991.05, Brent crude 0.24% to $92.58 a barrel and gold 0.20% to $1,708.94/oz.

In corporate news, MultiChoice will release its interim results and Sappi its annual results on Thursday.

Africa’s largest pay-TV provider expects to report earnings growth later this week after it benefited from rising subscriptions and better performance outside SA, it said on Monday. But performance was held back by the rand weakening through the year.

The group expects core headline earnings per share (HEPS) for the period to be 1%-5% or 5c-23c higher than the 46c previously.

The pulp and paper producer said in October that it expects earnings for the fourth quarter to be higher than those of the unprecedented levels achieved in the third.

On the economics front, Stats SA will publish the mining production and sales figures for September at 11.30am and manufacturing production and sales data for the same month at 1pm.

Mining output fell 5.9% year on year in August after an 8.2% fall in July. This marked the seventh consecutive annual fall in activity in a sector hampered by power cuts and the recent strike at Transnet.

Manufacturing defied expectations in August as it increased for a second consecutive month, but 25 days of power outages in September and the strike at Transnet are expected to weigh on manufacturing and GDP growth for the rest of the year.

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Source: businesslive.co.za