JSE could retreat from highs in line with global markets
The JSE, which is close to record highs, is likely to stage a retreat on Tuesday amid renewed worries about the potential rise in global inflation and interest rates.
“And just like that, we’re back to financial markets’ schizophrenic flirtation with inflation,” said Jeffrey Halley, market analyst at Oanda in a note. “Not enough meds have been ingested clearly because all the talk was of ebbing inflation fears after Friday’s mammoth non-farm payrolls miss.”
The trading picture was grim in Asia, where Hong Kong’s Hang Seng and Japan’s Nikkei 225 tumbled 2% and 3%, respectively.
The sell-off was mainly concentrated in the big technology shares, with Tencent, which gives direction to the JSE through the Naspers stable, dropping in the region of 3%.
The rand, which typically would negatively to swings in global sentiment, seem resilient, shedding just 0.25% to R14.05/$.
The resilience in the rand, which hit a 16-month high on Monday, could be connected to higher commodity prices, such as iron ore and copper, which are near record highs.
Higher commodity prices have boosted JSE-listed Kumba Iron Ore and Anglo American, which both hit record levels on Monday. Anglo American is trading at R674, which gives it a market value of R918bn. In 2016, the share price sank to lows of R57.97 when commodity prices were a lot weaker.
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