JSE looks set to benefit from Monday’s Asia share recovery

The JSE looked set to begin the week positively on Monday morning, as Asian markets pushed higher after a sharp global equity selloff on Friday.

US President Donald Trump’s comments that trade talks scheduled with China in September could be cancelled put markets on the back foot.

Chinese authorities had set the yuan back above 7/$ on Monday, a key psychological level that the currency had passed last week, unsettling markets.

Asian markets were higher regardless, with the Shanghai Composite up 0.7% on Monday morning, while Japan’s Nikkei had added 0.4%.

Chinese technology giant Tencent was up 1.4%, boding well for Naspers, which holds 31.5% of the company.

The rand remains under pressure, opening at R15.25/$ on Monday, with Eskom’s debt woes continuing to put additional pressure on the local unit.  Public enterprises minister Pravin Gordhan has said that a paper outlining options for dealing with the power utility’s debt load will be ready by mid-September.

The general consensus is that the rand is oversold at these levels and that a retracement is on the cards, said Peregrine Treasury Solutions partner Bianca Botes in a note. “The only question, however, is whether the global geopolitical environment will allow for this correction.”

There is little on the economic calendar on Monday, although US inflation data on Tuesday will be closely watched.

Local retail sales are due on Wednesday, with the consensus that sales eased slightly in June compared with May’s 2.2% year on year growth. The Trading Economics’ consensus is for sales to have risen 2% year on year in June.

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Source: businesslive.co.za