JSE likely to push higher as threat of military conflict subsides

The JSE is likely to move higher on Wednesday after Russia gave diplomacy a fighting chance, saying it was partially withdrawing its troops amassed on the Ukraine border.

The claims of partial withdrawal eased the concern of a military conflict between the two countries, which could have a destabilising effect on the global economy. Both countries account for a quarter of global wheat exports.

The price of Brent crude held steady at $93.14 a barrel in early trade, after dropping just more than 3% on Tuesday in its biggest one-day loss since late November as risk premium built into the oil price unwound. Russia exports about 8% of global crude oil production.

However, US President Joe Biden tempered expectations by warning on Tuesday night that military confrontation was still a “distinct possibility”.

Asian markets were higher, following the positive lead from Wall Street, where the tech-heavy Nasdaq gained more than 2% to lead major indices there.

The local share market is likely to follow suit, though gold shares could pull back in line with a slightly lower gold price.

Iron ore-aligned stocks such Kumba Iron Ore and Exxaro Resources could track lower in the light of weaker prices of steelmaking ingredient.

Elsewhere, the rand was little changed in early trade, but relatively strong on a trend basis despite higher US treasury yields, which have boosted the dollar.

The SA’s currency changed hands to the dollar at R15.07, compared with R15.50/$ just more than a week ago.

Stats SA will release inflation data for January later on Wednesday morning. Economists expect SA’s headline inflation to have risen at an annual pace of 5.7% in January, slowing from a five-year high of 5.9% in December.