JSE faces buoyant global markets on Friday as inflation concerns ease

The JSE looks set to open to positive global markets on Friday morning, as investors seize on good news and look to put fears over stagflation and slowing global growth to the side.

US producer inflation came in lower than expected on Thursday, rising 0.5% month on month, its slowest pace so far this year, while there were also some strong earnings reports from major US banks, further boosting sentiment.

“Markets completely ignored the fact that the producer inflation data was flattered by a slump in airline fare prices, while ominously, the energy and food components surged,” said Oanda senior market analyst Jeffrey Halley in a note.

“Buy the dip in everything should be the theme of the day in Asia after the Fear of Missing Out [FOMO] gnomes of Wall Street spent their overnight session doing much the same thing,” he said.

Surging energy prices and supply chain disruptions have now  become a major threat to global sentiment, raising concerns that central banks will need to accelerate monetary policy tightening.

Commodity prices in general remain elevated, benefiting the rand, given mining is a key source of foreign earnings in SA.

The rand was 0.17% firmer at R14.76/$ on Friday morning, having gained about 30c since Tuesday. Focus in the early part of next week will be on the release of China’s third-quarter GDP numbers, which will help guide market expectations of demand for commodities.

In morning trade the Hang Seng was up 0.83% and the Shanghai Composite 0.29%, while Japan’s Nikkei was up 1.51%.

Tencent, which influences the JSE via the Naspers stable, had gained 2.57%.

Gold was flat at $1,794.69/oz while platinum was little changed at $1,059, having risen 3.89% on Thursday. Brent crude was 0.61% higher at $84.62 a barrel.

The local corporate and economic calendar is bare on Friday.

gernetzkyk@businesslive.co.za