JSE faces mixed Asian markets after busy Thursday
The JSE is facing mixed Asian markets on Friday as the US markets ended lower overnight, the UK prime minister resigned and media reports that China is discussing shortening the quarantine period for visitors to the country.
The Nikkei in Japan retreated 0.29%, the Hang Seng in Hong Kong 0.17% while the Shanghai composite in mainland China gained 0.50%. Year to date, the Hang Seng is down by more than a quarter (30.17%), the Shanghai composite 16.03% and the Nikkei 8.10%.
Tencent, which influences the JSE via Naspers, gained 1.20%, but has close to halved (48.17%) this year.
In Japan, the Nikkei declined in part because of losses on Wall Street overnight. On top of this, new data points to higher inflation in the country, putting pressure on its central bank, which has opted to keep interest rates lower while most countries have hiked theirs.
US markets also weighed on the Hang Seng while traders are concerned about new Covid-19 infections in Beijing reaching its highest in four months.
The Shanghai composite rose somewhat after Bloomberg reported that the Chinese Communist Party is considering cutting the quarantine period for visitors despite the tough economic recovery that lies ahead for the world’s second-largest economy as its strict zero-Covid policy remains in place.
“The proposal hasn’t been signed off by the party leadership and previous relaxation of quarantine rules haven’t been a precursor to any loosening in China’s zero-Covid approach,” National Australia Bank head of market economics Tapas Strickland wrote in a note on Friday.
“More transmissible variants are making it harder to suppress infections and recurrent outbreaks are becoming a feature of daily life across the country. This creates the risk of further large-scale lockdowns. Even if that is avoided, localised restrictions — and the fear of them — will keep in-person activity depressed,” Capital Economics senior China economist Julian Evans-Pritchard wrote on Friday.
US markets ended lower on Thursday. The Dow Jones slipped 0.30%, the S&P 500 0.80% and the Nasdaq 0.61%. The Nasdaq has shed close to a third of its value so far this year (32.96%), the S&P 500 close to a quarter (23.57%) and the Dow Jones 17.09%.
In local market news, the JSE pared losses to close slightly firmer on Thursday, in line with European and markets as investors digested the UK prime minister’s resignation and strong US corporate earnings. The local bourse gained 0.22% to 65,794 points earlier while the top 40 was 0.23% firmer.
Liz Truss handed in her resignation on Thursday after just six weeks in office after a failed tax-cutting budget that rocked financial markets last month. The controversial budget was reversed by the new chancellor of the exchequer Jeremy Hunt days after his predecessor, Kwasi Kwarteng, was axed.
“Liz Truss finally resigned as UK prime minister but there hasn’t been much market impact, given her low-tax policy agenda had already effectively been ditched,” Bank of New Zealand senior interest rates strategist Nick Smyth wrote in a note on Friday.
“Bookmakers have installed former chancellor and Truss’s leadership rival Rishi Sunak as favourite to become the new PM, with Penny Mordaunt and Boris Johnson also seen as in contention,” he added.
The rand lost ground against the rampant dollar which continues to strengthen as it remains a relatively safe haven against the volatility of global markets. The dollar was trading at R18.36 on Friday morning and the rand has fallen 15.08% against the greenback so far this year.
In commodities, the price of Brent crude rose 0.70% to $93.03 a barrel while gold retreated 0.32% to $1,622.42/oz and platinum was 0.56% lower at $908.89.
In local news, Spear Reit will release its interim results while no economic news is expected.
Source: businesslive.co.za
