JSE faces mixed Asian markets on Friday as commodities feel pressure

The JSE faces mixed Asian markets on Friday morning, amid some eye-catching moves for commodity prices overnight, with investors still jittery after the US Federal Reserve’s unexpected shift in tone earlier this week.

The Fed brought forward its projections for interest rate hikes and inflation on Wednesday, giving a lift to the dollar, and putting some pressure on global commodities priced in this currency.

Chinese authorities also rattled investors this week as it hits out at “speculators” in the market it blames for elevated commodity prices. The country also announced it would be releasing reserves of metals including copper, aluminium and nickel.

“So there can be no doubt that the froth has well and truly been blown off many commodity market, yet if the global [growth] reflation trade is still very much intact, it is hard to envisage that commodity prices overall are not going to remain strong as we go through the second half of 2021 and into 2022,” said National Australia Bank analyst Ray Attrill in a note.

“Remember too, China will need a lot of commodities to service this demand from the rest of the world,” he said.

In early trade on Friday the Shanghai Composite was down 0.49% and Japan’s Nikkei 0.1%, while the Hang Seng had added 0.53%.

Tencent, which can give direction to the JSE via the Naspers stable, had added 0.75%.

Gold was up 0.86% to $1,786.82/oz, recovering from a 2.3% slump on Thursday. Platinum was 2.04% firmer at $1,075.24/oz, having crashed 5.5% in the previous session — its worst one-day loss since March 2020.

Brent crude was 0.64% weaker at $72.50 a barrel, extending a 1.1% loss on Thursday.

The rand was 0.21% firmer at R14.07/$, having lost more than 2% since Tuesday.

There is little on the local corporate and economic calendar on Friday, and focus may stay offshore.

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