JSE faces mixed Asian markets amid ceasefire talks and China’s Covid wave

The JSE looks set to open to mixed, though mostly higher, Asian markets on Tuesday morning, with focus still on the war in Ukraine, as well as China’s Omicron-fuelled Covid-19 wave.

Delegates from Ukraine and Russia have arrived in Turkey for their first face-to-face talks in about two weeks, while Shanghai, China’s financial hub, has entered lockdown as authorities conduct mass testing.

The prospect of additional supply chain disruptions stemming from Covid-19 in the world’s second-largest economy has added to jitters over surging commodity prices, though oil prices eased on Monday after spiking in the wake of a drone attack by Houthi rebels on a Saudi Arabian facility.

Markets also felt pressure from a partial inversion of the US treasury curve — referring to a phenomenon where yields on longer-dated bonds fall below shorter-dated bonds — often seen as a harbinger of a recession. Analysts, however, noted that markets are pricing in interest increases, while US Federal Reserve chair Jerome Powell has pushed back against this being a sign of a future recession.

“In reality, there is nothing he could do about it, as the inflation problem needs to be addressed fast,” Swissquote senior analyst Ipek Ozkardeskaya said in a note on Monday.

In morning trade the Shanghai Composite was down 0.42%, while the Hang Seng had gained 0.52% and Japan’s Nikkei 0.59%.

Tencent, which often determines the direction of the local bourse via Naspers, had gained 2.24%.

Gold was flat at $1.924.06/oz, while platinum was little changed at $983. Brent crude had risen 1.46% to $111.08 a barrel, having fallen 8.19% on Monday, was investors watched ceasefire talks and China’s Covid-19 wave.

Prices have become very elevated and are susceptible to further spikes as Europe looks to pivot away from Russia and sanctions bite, Oanda senior market analyst Craig Erlam said in a note.

The rand was flat at R14.67/$, having slipped 0.69% on Monday.

SA’s quarterly labour force survey for the fourth quarter is due later, with economists expecting an improvement from record unemployment in the third quarter, as the economy recovered from violent riots in July.

Empowerment group Brimstone Investments is due to release its results for the year to end-December later, saying in a recent trading update it expects headline earnings per share to rise more than sixfold.

Among the reasons for the increase, the group said in a trading update it had benefited from an upward valuation of listed investments, improved trading performances from subsidiaries and its disposal of its Lion of Africa Insurance business.

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