JSE faces mixed Asian markets on Monday as oil surges

The JSE faces mixed Asian markets on Monday morning, with much focus still on the threat of rising inflation, with oil surging to a one-year high after a series of drone and missile attacks in Saudi Arabia.

Global markets remain volatile as inflation concerns put pressure on long-term bond yields, which have weighed on the relative value of future earnings of equities.

The US Senate passed a $1.9-trillion (R29.2-trillion) stimulus package on Saturday, which will head back to the lower chamber of Congress this week, before going to the White House to be signed into law.

In morning trade Asia was mixed, with oil sharply up, after news of another series of drone attacks on oil facilities and military targets in Saudi Arabia, reportedly made by Yemeni Houthis.

Brent crude had surged 5.47% to $70.49 a barrel, which follows a string of gains last week, and with oil at its highest level since January 2020. Last week’s gains followed surprise news oil cartel Opec had opted to keep production cuts in place.

In morning trade on Monday the Hang Seng was down 1.31% while the Shanghai Composite had lost 1.01%. Australia’s All Ordinaries index was up 0.62%.

Monday’s climb in oil prices is also weighing on energy-hungry Asian markets, Oanda senior market analyst Jeffrey Halley said in a note, adding that the retreat by US index futures as US yields climb in Asia is the main driver for the reversal.

Tencent, which gives direction to the JSE via the Naspers stable, had fallen 3.6%.

Gold was up 0.27% to $1,704.69/oz while platinum had risen 1.05% to $1,136.30.

The rand was a little weaker at R15.37/$.

Consumer goods group AVI, whose brands seafood company I&J, is expected to report growth in headline earnings per share (HEPS) in its six months to end-December, benefiting from lower finance costs as interest rates fell. Growth in its food and beverages was offset by pressure on its fashion business during the period, and revenue was largely flat.

Document management specialist Metrofile is expected to report growth of up to 22% in HEPS for its six months to end-December, though it did not go into too much detail in a recent trading update.

gernetzkyk@businesslive.co.za