JSE faces mostly weaker Asian markets on Thursday ahead of ECB decision

The JSE looks set to contend with mostly weaker Asian markets on Thursday morning, with focus on the a crucial European Central Bank (ECB) policy announcement later.

Surging inflation in the eurozone is laying the groundwork for interest rate increases in 2022, but it is still unclear how many are on their way, or how fast the central bank will reduce its asset purchases.

A hike on Thursday would be a major shock, but markets are pricing in 75 basis points (bps) of interest rate increases by September, Han Tan, chief market analyst at Exinity Group, said in a note on Wednesday. The ECB announcement is due just before 2pm SA time.

Attention is also on US consumer inflation numbers due on Friday, which will be closely watched amid the hope that price pressures in the world’s largest economy are peaking.

“Markets’ propensity for risk-taking could be rejuvenated if the latest inflation data emboldens the thought that consumer price growth has already hit its summit, potentially taking the edge off the US Federal Reserve’s ultra-hawkish stance,” said Tan.

In morning trade Australia’s All Ordinaries index was down 0.92%, the Shanghai Composite 0.49% and the Hang Seng 0.39%, while Japan’s Nikkei added 0.25%.

Tencent, the Chinese media giant important to the JSE due to the shareholding of the Naspers stable, was up 0.82%.

Gold was little changed at $1,855.03/oz while platinum was little changed at $1,007.49. Brent crude was up 0.17% to $123.86 a barrel.

The rand was flat at R15.28/$, but has gained almost 2% over the past week.

Local mining production and manufacturing numbers for April are due later, with economists expecting both to show further year-on-year contraction. Total mining output fell 9.3% year on year in March after falling 5.8% year on year in February, while manufacturing was down 0.8% in March.

The productive sectors of SA’s economy are expected to have been under pressure in April from flooding in KwaZulu-Natal, with load-shedding and a dysfunctional rail network adding to general pressure.

In corporate news, fashion retailer Mr Price is due to release its results for the year ended April 2 later, saying in a recent trading update that headline earnings per share are expected to rise by about a quarter, boosted by acquisitions and insurance proceeds.

Media group MultiChoice is due to release its results for the year to end-March later. It said in a recent trading update that trading profit is expected to be little changed, with a recovery in advertising revenue and subscriber growth offset by increased content costs.

[email protected]