The JSE looks set to start to positive Asian markets on Thursday morning, with risk assets welcoming signals from the US Federal Reserve overnight that suggest the worst may be over in terms of interest rate hikes.
The Fed delivered a 75-basis-point hike for the second consecutive meeting, but signalled it may be appropriate to slow the pace of increases as inflation starts to return to more normal levels. The Fed has effectively given up on forward guidance, saying its future moves will be data dependent.
For markets, however, the commentary was evidently less hawkish than feared, National Australia Bank economist Taylor Nugent said in a note.
US markets rallied in response, with the Nasdaq jumping more than 4%, its best day since 2020. US stocks have also found support this week from earnings reports from the likes of Meta, Alphabet and Microsoft.
Asian markets were more subdued on Thursday than their Wall Street counterparts, however, and focus in the day will be on US GDP numbers, which could show the world’s largest economy fell into a technical recession in the second quarter.
It seems that Asia is struggling to move China risks, US recession risks, European recession risks, and slowdowns in the region where inflation is playing catch-up, said Oanda senior market analyst Jeffrey Halley in a note.
“That appears to be tempering enthusiasm, and I am sure the rise in oil prices this week isn’t helping either,” he said.
In morning trade, the Hang Seng was down 0.59%, while the Shanghai Composite was up 0.57%, Japan’s Nikkei 0.22%, and Australia’s All Ordinaries Index 0.84%.
Tencent, often providing direction to the JSE through the Naspers stable, had gained 0.44%.
Gold was 0.5% higher at $1,736.50/oz, while platinum had gained 0.34% to $890. Brent crude was little changed at $107.25 a barrel.
The rand was 0.24% firmer at R16.65/$, strengthening almost 1.3% on Wednesday.
Steelmaker ArcelorMittal SA is due to report its half-year results to end-June later, saying recently that headline earnings per share could rise as much as 26%, amid a return of demand to more normal levels and higher prices.
SA’s producer inflation numbers for June are also due later and are expected to show an acceleration to near 16% from May’s 14.7% year-on-year print.