JSE set to start week positively as crude pushes to three-year peak

The JSE is likely to start the week on a positive note, joining its global counterparts while Brent crude powered to a fresh three-year high, fueling global inflation concerns.

The rand was a touch weaker in early trade on Monday, weighed down by a strong dollar as US Treasury yields held at elevated levels despite last week’s disappointing US nonfarm payrolls report.

The world’s largest economy created 194,000 jobs in September, vs market expectations of 500,000.

The market’s behaviour after Friday’s jobs report suggests that it is still expecting that the US Federal Reserve will in November give a timeline on when it will start reducing its huge bond-buying programme, which has been a key pillar of support for risk assets over the past 18 months of the pandemic.

The rand changed hands to the dollar at R15 in early trade while the yields on US benchmark Treasury note stood at 1.60%, the highest since June.

SA’s currency has been hypersensitive to the perceptions of potential changes in US monetary policy since mid-August, swinging from R15.40/$ to R14.12/$ and current levels of R15/$.

SA’s currency will probably strengthen as much as 4% from last week’s level to about R14.25/$ by year,  according to Jeff Schultz, senior economist at BNP Paribas SA, citing SA’s healthy account surplus, which was driven by an earlier surge in commodity prices.

Elsewhere, Brent crude rose 1.28% to $83.62, the highest in three years. It is likely to give a further boost to JSE-listed stocks such as Sasol.

Oil prices have risen 62% year to date, sparking fears of higher inflation globally.

Other commodity prices were marginally higher after a strong rebound on Friday. Platinum was up 0.14% to $1,028.44/oz, after gaining 4.5% on Friday, its biggest one-day gain since September 22.  Palladium was flat at $2,078.00/oz, after rallying 3% on Friday.

mahlangua@businesslive.co.za