JSE set to benefit from gains on Wall Street and Asia

It looks like the JSE and world markets will be able to take a breath before interest rate decisions later this week, particularly from the US Federal Reserve and the SA Reserve Bank on Thursday.

It is green screens from Asia on Tuesday morning after the Hang Seng in Hong Kong gained the most with 1.33%, followed by the Shanghai Composite in mainland China with 0.46% and Japan’s Nikkei with 0.44%.

The Hang Seng was lifted by US markets closing higher overnight as the market in Hong Kong moved away from a near six-months low on Monday.

The Shanghai Composite was elevated in part by People’s Bank of China keeping the one-year and five-year loan prime rate unchanged to prop up the weaker yuan, while the government on Monday committed to boosting consumption.

The Nikkei recouped some of its losses despite the latest inflation rate reaching a near eight-year high in the Land of the Rising Sun. The latest figures, released on Tuesday, showed annual inflation rose to 3%.

Wall Street closed higher overnight as the Nasdaq ended 0.76% higher, the S&P 500 0.69% and the Dow Jones 0.64%.

“US equities closed in the green but struggled to find direction in a start to the week that was light on news flow. Holidays in Japan and the UK and coverage of the queen’s funeral added to the picture of a slow start to what will be a busy week,” National Australia Bank economist Taylor Nugent said in a note on Tuesday.

Tencent, which influences the JSE via Naspers, gained 2.15%.

In local news, the JSE closed weaker for a fifth consecutive session on Monday, leaving the market’s main index at its lowest point in two weeks, though it finished well off the day’s lows in line with other global markets. The all share index lost 0.16% to settle at 66,474 points, after earlier weakening as much as 1.57%.

Meanwhile, the rand slipped on Monday towards levels last seen at the height of the pandemic-induced selling frenzy, dealing a blow to consumers and businesses battling rampant inflation.

The rand weakened as much as 1.1% to R17.79/$ in afternoon deals on Monday, threatening to break through the R18/$ mark for the first time since May 2020. The rand’s drop on Monday extended its decline so far this year to nearly 11%, while the dollar is now rampant.

Little is expected in terms of corporate releases on Tuesday. On the economic side of things, the Reserve Bank will release July data for the composite business cycle indicator, which examines the direction in which real economic activity is moving. A drop of 0.2% is forecast for July after a 0.4% gain in June.

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Source: businesslive.co.za