JSE set for rebound in line with global stocks
Global markets have stabilised after a steep sell-off over the past week after the Fed caught investors off guard
The JSE is likely to move higher on Tuesday, ending a four-day losing run during which the all share index lost just more than 3% to trade at its lowest point since March 25.
Global markets showed signs of stability after a steep sell-off over the past week as the US Federal Reserve brought forward the expectation of higher interest rates, catching investors off guard.
Japan’s Nikkei 225 rebounded 3.06% and Australia’s ASX/200 recovered 1.54%, while Hong Kong’s Hang Seng was flat.
The rand, which has suffered collateral damage as markets adjusted to the prospect of higher rates in the US, was down 0.27% to R14.26/$. The local currency was trading at R13.76/$ before the Fed’s meeting last Wednesday.
The global risk-off sentiment was reflected in net sales of local shares and bonds over the past week. Foreign investors sold a net R6.6bn worth of shares, according to the JSE data. Net bond outflows were about R5bn.
A weaker rand increases the cost of imported products and has the potential to stoke inflation.
Brent crude topped $75 a barrel for the first time since April 2019, making increases in fuel prices more likely in the near future. However, shares of petrochemical giant Sasol and mobile operator MTN could benefit from high oil prices.
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