JSE opening to flat Asian markets as investors eye US data

The JSE is facing flat Asian markets while investors will zoom in on US payroll and unemployment data, a key indicator of what the US Federal Reserve might do next, being released later on Friday.

Job growth data for August is expected to slow from the strong gains in July, but still forecasted to be strong. The latest data will be an important factor for the Fed in deciding if it will hike interest rates next month.

National Australia Bank economics director Tapas Strickland said in a note on Friday that stronger than expected data could add to the argument for a 75 basis point hike in September.

“Another case of ‘good news is bad news’ for risk assets perhaps?” he said.

This comes as investors remain wary of Federal Reserve chair Jerome Powell’s remarks last Friday at the Jackson Hole central banking conference in Wyoming in the US that the central bank remained committed to tightening monetary policy to battle high inflation.

“Data since Jackson Hole last Friday continues to underscore the ‘higher for longer’ Fed rhetoric and the rise in real yields will likely continue to test risk assets,” Strickland said.

The Hang Seng was down 0.62%, the Nikkei 0.073% and the Shanghai composite up 0.28%.

Tencent, which influences the JSE via Naspers, rose 0.43%.

Chinese markets are set for their third straight weekly decline despite Thursday’s gains. This comes after weak economic data earlier in the week and new Covid-19 lockdowns. The 21-million residents of Chengdu are the latest to face restrictions, along with Shenzhen and Dalian.

“Given Chengdu is also a production hub for hi-tech manufacturing [cars, electronics], global supply chains are likely to continue to be disrupted, while also adding motivation for companies to diversify supply chains,” Strickland said.

Markets in Japan are set for a second weekly drop as investors monitor the weaker yen and remain concerned about Powell’s remarks.

The JSE all share ended 1.84% lower at 66,021.71 points on Thursday, dragged down mainly by big mining and industrial stocks while the top 40 shed 2%.

Gold gained 0.22% as it traded at $1,699.19/oz. The prices of platinum and a barrel of Brent crude rose by 0.30% and 2.15% to $830.50 and $94.14, respectively.

The rand weakened against the dollar, declining 0.16% to R17.29/$.

The corporate calendar for Friday is bare, and no economic data is expected.

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