JSE to contend with weaker Asian markets on Thursday amid inflation jitters

The JSE looks set to start to weaker Asian markets on Thursday morning, as well as continued stage 4 load-shedding, with markets digesting some surprising central bank moves as global inflation prospects deteriorate.

On Wednesday, the Bank of Canada surprised markets by ending its quantitative easing programme and bringing forward its rate hike expectations, citing a worsening inflation outlook.

Similarly, Brazil’s central bank surprised markets by hiking rates 1.50% to 7.75%, with the bank indicating another hike by as much at their next policy meeting, said Oanda senior market analyst Jeffrey Halley in a note.

US markets took a bit of a breather from their recent earnings-fuelled rally, and in morning trade the Shanghai Composite and Japan’s Nikkei were both down 0.93%, while the Hang Seng had given back 0.18%.

Tencent, which can influence the direction of the local bourse via the Naspers stable, had added 0.62%.

Gold was up 0.12% at $1,799.34/oz, while platinum had gained 0.15% to $1,012. Brent crude was 1.66% lower at $82.79 a barrel.

The rand was flat at R15.08/$, slipping 1.56% on Wednesday, and breaching the psychologically important R15/$ for the first time in two weeks.

Earlier this week, the US revoked the licence of China’s largest telecommunications company, China Telecom, citing national security concerns. This points to further possible diplomatic tensions between the world’s two largest economies.

Labour services group Adcorp is due to report a doubling of headline earnings per share from continuing operations in its six months to end-August later, though it didn’t go into details in its recent trading update about what was driving this performance.

ICT group EOH, whose shares have lost 95% of their value over the past five years amid the uncovering of dodgy contracts with the government, is due to report improved operating profits for its year ending July later. The group said in its recent trading update the business was now stable, as it pursues a turnaround aimed at tackling its R2bn debt load.

Mining group Sibanye-Stillwater is also due to report on its operational performance for the three months to end-September later, the group’s third quarter.

On the economic front, September’s producer inflation figures, as measured by the annual change in the producer price index, are set to be released later, with expectations that they remained relatively steady from August’s 7.2% year-on-year print. Details of the data will likely be scrutinised, as the world grapples with rising energy costs and supply chain disruptions.

gernetzkyk@businesslive.co.za