MARKET WRAP: JSE slightly weaker as global risks weigh on sentiment

The JSE closed marginally weaker amid mixed global markets on Monday, with investor focus still on the US corporate earnings season and risks from rising Covid-19 cases in China, persistent inflation and global supply chain disruption.

Strong corporate earnings helped lift markets last week, however, global threats remain the main focus for now. Investors are hoping that another round of strong earnings will lift sentiment with heavyweight tech companies due to report this week.

Markets are also digesting comments by US Federal Reserve chair Jerome Powell on Friday indicating that inflation concerns are likely to persist into 2022, though he said that while it is time to taper bond purchases, it is not yet time to raise interest rates.

US treasury secretary Janet Yellen said over the weekend that she expects price increases to remain high through the first half of 2022. She added that the current situation reflects “temporary” pain, and that inflation is expected to ease in the second half as issues ranging from supply bottlenecks, a tight US labour market, and other factors arising from the pandemic improve.

“Inflation concerns will continue to dominate markets this year, as the price of Brent crude oil remains elevated and has started the week above the $85 mark,” said RMB economist Siobhan Redford.

“I have said it multiple times this year, but the pandemic remains a central area of concern,” she said. “The virus has intensified in parts of China, which has resulted in increased restrictions. This has spurred further concerns around economic activity in the world’s second-largest economy, which has implications both up and downstream in the global supply chain.”

The JSE all share lost 0.1% to 66,980 points and the top 40 0.13%. Industrial metals gained 1.66%, resources 0.77%, financials 0.36% and banks 0.23%. Precious metals fell 1.06% and industrials 0.88%.

At 5.30pm, the Dow Jones industrial average was 0.15% firmer,  while in Europe, the FTSE 100 had gained 0.33%, Germany’s DAX 0.48%, and France’s CAC 40 had lost 0.14%.

Earlier, the Shanghai Composite gained 0.76%, while Japan’s Nikkei lost 0.71%. Hong Kong’s Hang Seng was unchanged. 

At 5.43pm, the rand had strengthened 0.72% to R14.7112/$, 1.05% to R17.0837/€ and 0.42% to R20.2636/£. The euro was 0.3% weaker at $1.1612. 

Gold gained 0.83% to $1,807.29/oz and platinum 1.76% to $1,063. Brent crude rose 1.86% to $86.33 a barrel. 

tsobol@businesslive.co.za