Picture: JSE
Picture: JSE

The JSE all-share index could start the new week on the front foot as Asian markets rally in the wake of a sharp sell-off sparked by concerns about a slowing global economy.

Stock markets have been battered by worries that the protracted trade war between the US and China is weighing on economic growth. These fears were compounded last week when US yield curves inverted. An inverted yield curve, in which short-term bonds yield less than longer-dated ones, implies that investors expect lower rates in future amid a possible recession.

But bond yields edged higher on Friday on reports that Germany could implement a fiscal stimulus programme, using new debt, to aid its economy.

“While fiscal stimulus would be a welcome support to the European Central Bank’s policy initiatives, just how much and how long deficit spending could last is an open and unanswered question,” analysts at ANZ Banking Group said in a note.

Asian stocks were mostly higher on Monday after the Chinese central bank effectively lowered funding costs for businesses to boost the economy.

Hong Kong’s Hang Seng index was 1.9% up at the lunch break, while the Shanghai Composite rose 1.5%. Japan’s Nikkei 225 gained 0.7%, as did Korea’s Kospi, while Australia’s main benchmark added 0.8%.

Chinese internet and gaming giant Tencent, which influences the JSE via major shareholder Naspers, surged 1.8% in Hong Kong.

JSE-heavyweight BHP Group added 0.7% in Australia.

No major company results are expected locally on Monday after Sasol delayed its results by a month on Friday.

Statistics SA is due to publish data on the local food and beverages, land transport and tourism industries for June.

Elsewhere, the EU is expected to release current account and consumer-inflation data.

The rand, which has weakened in recent weeks with other emerging-market currencies, was slightly firmer on Monday morning at R15.27/$, R18.57/£ and R16.94/€.

hedleyn@businesslive.co.za