JSE could struggle as stimulus hopes contend with gloomy Asia data
Japan’s economy underperformed in the second quarter, while China’s exports to the US fell in August, underscoring the damage done by the ongoing trade conflict with the US
Disappointing Asian data vied with hopes of fiscal and monetary stimulus on Monday morning, with little risk-on sentiment in evidence.
Commodity prices and the rand were offering little direction on Monday morning, but Asian markets were registering gains despite further gloomy data.
Japan’s economy underperformed in the second quarter. China’s exports to the US fell 16% year on year in August, underscoring the damage being inflicted by the ongoing trade conflict with the US.
“Although traders are always on edge waiting for the next trade war headline, they’re leaning on the pillars of support from monetary policymakers as the expectation is running high for a significant monetary policy response by global central banks,” Vanguard Markets managing partner Stephen Innes said in a note.
All eyes this week are on the European Central Bank (ECB) monetary policy announcement on Thursday, with a stimulus package from the bank expected that could include a cut to overnight lending rates.
The JSE could feel some pressure from Naspers on Monday, with Tencent’s share price down 0.64% in Hong Kong. Naspers owns 31.2% of the Chinese media giant.
Gold was up 0.16% at $1,509/oz and platinum 0.2% to $951.12. Brent crude was 0.58% higher at $62.02 a barrel.
The rand was flat at R14.79/$.
The week should be fairly busy regarding corporate releases, but there isn’t much on the calendar on Monday.
Consumer goods group AVI is expected to report that group revenue rose 1.2% for the year to end-June, but the company said operating profit has fallen.
Old Mutual should also continue to be in the headlines, with it unclear whether axed CEO Peter Moyo will return to work. Moyo has said he would return to work, after the high court on Friday upheld an earlier ruling in his favour.
Xenophobic violence is also threatening domestic sentiment, with the operations of MTN, Shoprite and Pepkor among those affected amid protests in African countries after foreign nationals were attacked in SA last week.