JSE to contend with Asian slump on Thursday as inflation concerns resurface

The JSE faces sharply weaker Asian markets on Thursday morning, with the prospect of rising global inflation once again boosting bond yields and weighing on equities.

US jobs data on Wednesday disappointed, but the economic outlook for the world’s largest economy has been given a boost by news that the vaccine rollout may be faster than expected.

“The sell-off in global fixed-income markets is revving up again, spilling over to unseat equities and other relatively heavily positioned risk-sensitive assets,” said Axi chief global markets strategist Stephen Innes in a note.

Bond yields move inversely to bond prices, and higher bond yields weigh on the relative value of future earnings from companies.

In morning trade, the Hang Seng was down 2.55% and Japan’s Nikkei 2.8%, while the Shanghai Composite had given up 1.58%.

Tencent, which gives direction to the JSE via Naspers, had slumped 3.87%.

Gold was up 0.17% to $1,711.50/oz, while platinum was down 0.44% to $1,159.43. Brent crude was 1.03% higher at $64.65 a barrel.

The rand was slightly weaker at R15.10/$.

Banking group FirstRand is due to report its results for the six months to end-December, saying in a trading update in November that headline earnings per share (Heps) should decline more than a fifth during the period. The group said at the time, however, that the four months to end-October had been better than expected.

Insurance group Santam is expected to report its results for the year to end-December later that will reflect a sharp fall in Heps, driven by lower underwriting and investment results, as well as writedowns.

Freight and financial services company Grindrod is expected to report that its core businesses performed well in its year to end-December, with a weaker rand offsetting the effect of lower volumes in its ports and terminals business.

Financial services group Liberty Holdings is due to report that it swung into a loss in its year to end-December, amid a hit to investment returns and its insurance business, though losses narrowed in its second half.

[email protected]