JSE faces risk-off trade on Monday after attack in Saudi Arabia
The oil price shot up 10% after oil facilities were attacked in Saudi Arabia at the weekend, but gold miners should also benefit
The JSE could struggle along with global equity markets on Monday, as investors digest a weekend attack in Saudi Arabia that has resulted in a 10% surge in oil prices.
Yemen’s Houthi rebels used drones to attack the world’s largest oil production facility in the Middle Eastern kingdom, something that has threatened to disrupt about 5% of global oil supply. The US has blamed Iran, and has said it may release oil from its strategic reserves.
The attack is the sixth in about four months on a Saudi facility or tanker, said Oanda analyst Edward Moya in a note. The issue pointed to heightened tension between the US and Iran, he said, and underscored the risks posed by drones for the global oil market.
Asian markets were subdued, with Hong Kong’s Hang Seng down 1% at 6.30am SA time.
Oil surged 10.06% to $66.17 a barrel. Gold was up 1.13% to $1,505.39/oz while platinum was down 0.25% to $953.39.
The rand was steady at R14.6416/$.
Sentiment was also dented on Monday by yet more disappointing Chinese data. Industrial production grew only 4.4% in August year on year, a 17-year low.
All eyes this week are on monetary policy, with the US Federal Reserve set to make its policy announcement on Wednesday, which will be followed by the Reserve Bank’s statement on Thursday.
Markets are expecting a 25 basis point cut from the Fed, while the Reserve Bank is expected to keep the repo rate on hold at 6.5%.
Local gold miners and Sasol should benefit on Monday, while the corporate calendar is light.