JSE opens to lower Asian markets amid new rate hike worries
The JSE faces red tickers on Wednesday from Asian markets in part because of US markets closing lower on Tuesday as investors worry about the US Federal Reserve hiking interest rates in the world’s largest economy.
The Hang Seng in Hong Kong dropped 1.68% to reach an almost 25-month low, as it traded lower for the fifth consecutive session. This comes after losses on Wall Street overnight amid concern that the Fed will hike interest rates after the ISM non-manufacturing producers managers index (PMI) beat market forecasts, showing the US services industry picked up again in August.
“US equities struggle with the good ISM news amid increasing expectations for a 75 basis points Fed hike later in the month,” National Australia Bank currency strategist Rodrigo Catril said in a note on Wednesday. “A classic case where good news is bad news, as the ISM reveals the services sector of the US economy is in rude health, implying the Fed still has more work to do to bring inflation under control.”
Sasfin Wealth fixed income trader Alvin Chawasema said in a note on Wednesday that the strong performance “pushed back on the slowing US economy rhetoric, giving the Fed room to maintain [its] hawkish stance and markets to price in a 75% chance of a 75 basis points rate hike at the next meeting”.
Japan’s Nikkei lost 1.12% as it tracked Wall Street. The Shanghai composite in China was flat as investors waited to see how markets would react to Chinese trade data for August. Exports rose 7.1% year on year, well below the 12.8% forecasted. This was driven by weaker demand, domestic disruptions such as the historic drought, and China’s zero-Covid policy. This drag is expected to continue amid new lockdowns in some of China’s industrial hubs and energy shortages, despite policymakers pledging to support the economy by accelerating the rollout of pro-growth measures in the third quarter.
Tencent, which influences the JSE via Naspers, fell another 2.04%.
The JSE ended modestly higher on Tuesday after a fairly choppy session during which the all share index rose nearly 1% at one stage before dipping into the red when US markets opened. The index eventually settled 0.21% higher at 67,538.77 points, as the top 40 eked out a gain of 0.16%, propped up by a handful of big industrial shares.
Gold, platinum and Brent crude were all down. Gold fell 0.52% to $1,691.70/oz. Platinum declined by 0.39% to $845.81. Brent crude slipped 1.43% to $91.44 a barrel.
The dollar gained 0.52% against the rand, trading at R17.38/$.
Health and insurance group Discovery will release its 2022 results on Wednesday. It said last week it expects normalised headline earnings to jump as much as 75%, boosted in part by foreign-exchange gains and falling Covid-19 infection and mortality rates. Discovery and its peers had to set aside billions of rand in provisions to settle ensuing death and other claims because of the Covid-19 pandemic over the past two years.
The Bureau for Economic Research (BER) at Stellenbosch University and Rand Merchant Bank (RMB) will release the business confidence for the third quarter on Wednesday.
The survey covers more than 1,300 senior executives in the building, manufacturing, retail, wholesale and motor trade sectors. SA’s worst power outages on record in July are expected to weigh on the confidence of businesses before President Cyril Ramaphosa announced the energy crisis plan.
Source: businesslive.co.za