JSE struggles for traction along with global markets

The JSE struggled to find traction after opening slightly higher on Thursday, signalling a degree of caution before the release of US inflation data later in the afternoon.

Diversified mining stocks steadied after a recent fall left the resource 10 index 10% below its May 10 high amid the broad retreat in commodity prices. Insurance stocks and banks sagged after a relatively solid session on Wednesday.

The listed property sector, an asset class that has been dealt a heavy blow by Covid-19, remained on the road to recovery.

The big industrial stocks such as Naspers and Richemont, which will typically move the broader market because of their sizeable weightings, were subdued. MTN Group was the notable outlier though, rising nearly 2% to R107.81.

The all share was flat (-0.12%) at 67,598.98, but the resources index recovered 0.28%.

Europe’s major markets were narrowly mixed, after a broadly higher session in Asia as markets awaited the US inflation data.

“There’s a sense of every man for himself ahead of the US inflation data this evening, a data point that has left markets in limbo and seems to be taking an interminably long time,” Jeffrey Halley, senior market analyst Oanda, said in a note.

“The divergence between equities and bond yields is intriguing. It suggests an element of either complacency or confusion about the US inflation data tonight, with the transitory vs sticky argument clearly not resolved. Despite the gentle retreat this week, equity markets remain a hair’s breath away from record highs, while the US longer-dated yields have fallen to lows not seen since Q3 [third quarter 2020].”

The US consumer inflation is expected to have accelerated to an annual rate of 4.7% in May, according to Bloomberg median estimate, up from 4.2% in April, which was the highest level in 12 years.

The rand recovered 0.60% to trade at R13.63/$ in midmorning trading, after a wobble on Wednesday that coincided with power utility Eskom’s announcement that load-shedding would be escalated to stage 4.

The unreliable power supply is often cited as one of the key impediments to unlocking the potential of the SA economy, which contracted the most on record in 2020 as result of the pandemic-induced lockdown.

Commodity prices were looking a bit better, with Brent crude, in particular, turning into a positive territory to trade 0.33% higher at $72.20 a barrel.