JSE opens to mixed Asian markets on Wednesday amid US inflation threat

The JSE faces mixed Asian markets on Wednesday morning, with US markets down overnight amid jitters about rising inflation in the world’s largest economy.

The tech-heavy Nasdaq led the retreat, having its worst day since March, with analysts pointing to ongoing concerns that the US Federal Reserve may have to act sooner than its guidance, to combat inflation.

While it may be just a case of the old adage of “sell in May and go away” after a very strong November to April, a hawkish tilt by a number of central banks globally reinforces that time-based forward guidance will evolve in line with realised economic outcomes, National Australia Bank analyst Rodrigo Catril said in a note.

US treasury secretary Janet Yellen added to that hawkish tilt overnight after she said rates may need to rise to prevent the US economy overheating, Catril said.

He added, however, that Yellen’s comments were not new, and that she had also said she was not predicting a rise in rates. But there were still concerns, including from business, that rising inflation would not be as transitory as the Fed expected.

Markets in mainland China and in Japan remain closed for Golden Week on Wednesday, which could mute trading volumes.

In morning trade, the Hang Seng was flat, while South Korea’s Kospi was up 0.3% and Australia’s all ordinaries index 0.4%.

Tencent, which gives direction to the JSE via the Naspers stable, had fallen 1.27%.

Gold was 0.18% higher at $1,781.90/oz while platinum was flat at $1,238.29/oz. Brent crude was 0.14% lower at $68.34 a barrel.

The rand was 0.32% firmer at R14.42/$.

In local corporate news on Wednesday, Africa’s largest mobile operator, MTN, is expected to give an update on its first quarter to end-March.

In economic news, the IHS Markit SA purchasing managers’ index (PMI) for April, an economy-wide gauge of business conditions, is due on Wednesday, having risen to 50.3 points in March, from 50.2 points in February.

The PMI gives insight into private-sector business performance, which is expected to have shown continued recovery in April.

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Source: businesslive.co.za