JSE could extend losing streak on Tuesday amid Omicron jitters

The JSE looks set to open to weaker Asian markets on Tuesday morning, and may extend its four-session losing streak, as investors consider the threat posed by Omicron as well as possible tightening of US monetary policy.

China has reported its first Omicron case, the UK is worried about a surge in infections, and another study has confirmed that vaccines are less effective against the new variant.

There is also caution ahead of the US Federal Reserve’s policy announcement on Wednesday, when it is widely expected to indicate it is accelerating monetary policy tightening, given inflation surged to an almost four-decade high in November.

The JSE has weakened consistently since last Tuesday, when it, along with its global peers, staged a relief rally on news that Omicron seems less deadly than the Delta variant. Since touching almost 73,000 points last week, the local bourse has since given back 2%.

In morning trade the Hang Seng was down 1.26%, Japan’s Nikkei 0.83% and the Shanghai Composite 0.31%.

Tencent, which gives direction to the JSE via the Naspers stable, had given back 1.24%.

Gold was flat at $1,786.83/oz while platinum was little changed at $930. Brent crude had slipped 0.22% to $74.08 a barrel.

The rand was little changed at R16.02/$.

The corporate calendar is bare on Tuesday, while in economic news the FNB/Bureau of Economic Research consumer confidence index for the fourth quarter will be released later. The index partially recovered to -10 index points in the third quarter of 2021, after a reading of -13 index points in the second. The historical long-term average is +2.

Despite the violent protests and rampant looting in July, consumers, and by extension consumer spending, appeared resilient, FNB economists said in a note last week, with consumers expecting an improvement in their finances over the next 12 months.

gernetzkyk@businesslive.co.za