JSE to contend with weaker Asian markets on Wednesday amid domestic turmoil

The JSE faces weaker Asian markets on Wednesday morning, with sentiment jittery due to accelerating inflation in the US, while SA grapples with the threat of prolonged riots and looting.

Soldiers have been deployed to bolster police to help to quell the riots, which have put pressure on the rand this week, having already caused significant property damage and economic disruption, and SA’s vaccine rollout also under threat.

Global markets have also come under some pressure. Data on Wednesday showed US core inflation, which excludes volatile food and energy components, rose 4.5% year on year in June, its fastest pace since 1991.

The concern that rising inflation may not be as transitory as the US Federal Reserve expects remains a major theme in the market, with attention set to turn to testimony from Fed chair Jerome Powell before Congress later on Wednesday.

“Markets seem determined to wait for the Powell congressional testimony this evening before deciding whether more decisive inflation-related surgery is required.” Oanda senior market analyst Jeffrey Halley said in a note.

The rand was steady at R14.73/$, having slumped 2.19% on Tuesday, which followed a 1.69% loss on Monday.

In morning trade the Shanghai Composite was down 0.82%, the Hang Seng 0.58% and Japan’s Nikkei 0.29%.

Tencent, which can influence the direction of the local bourse through Naspers, had risen 1.17%.

Gold was up 0.24% to $1,811.78/oz while platinum was flat at $1,107.95. Brent crude was 0.21% lower at $76.20 a barrel.

There is little on the local corporate calendar on Wednesday, with focus instead likely to be on how stocks, such as landlords and retailers, fare amid the looting and violence.

According to the SA Property Owners Association, more than 200 malls have been looted and/or destroyed so far, with at least 600 stores burnt or damaged.

The JSE’s banking index plunged 4.45% on Tuesday, its worst one-day loss since December 2020, while the JSE’s retailers index gave back 4.48%.

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Source: businesslive.co.za