MARKET WRAP: JSE tracks global markets weaker as geopolitical tension weighs on sentiment
Tension is increasing over Russia’s military build-up on Ukraine’s borders, boosting gold and oil, while weighing on riskier assets
14 February 2022 - 18:34
by Lindiwe Tsobo
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The JSE was weaker on Monday, tracking mostly lower global marketsas investors weighed up deepening geopolitical tensions in Eastern Europe. .
Tension is increasing over Russia’s military build-up near Ukraine, as the region enters a potentially decisive week, with the US warning that an invasion may be imminent.
Chief US equity strategist at Morgan Stanley Michael Wilson has warned that a potential Russian invasion could “tip several economies into an outright recession.”
“Stock markets are trading lower, while gold and oil markets surged on continued concerns over Russia invading Ukraine,” said Citadel Global’s Bianca Botes. “US intelligence officials warned on Sunday that an invasion might happen as soon as Wednesday. This does not bode well for any risky assets.”
The JSE all share lost 0.81% to 75,765 points and the top 40 0.79%. The precious metals and mining index rose 4.56% and resources added 0.92%. Industrials fell 2.17%, financials 1.15% and industrial metals and mining 0.8%.
Goldfields led the gains in the precious metals and mining index, with its share price rising the most since April 2020, up 10.96% to R184.44. AngloGold was 8.3% higher and Harmony added 6.36%.
“Gold counters have led precious metals higher as they catch up to late gains in the underlying commodity’s price on Friday,” said IG senior market analyst Shaun Murison.
After the JSE closed on Friday, gold rallied more than $20 an ounce.
It would appear that escalating geopolitical tensions between Russia and the Ukraine have spurred some safe-haven appeal, said Murison.
“What is interesting is that we saw gold rallying late last week despite renewed strength in the US dollar . Gold often displays an inverse relationship with the dollar and US Treasury yields. The fact that these asset classes were moving in tandem does support the suggestion of short-term safe-haven demand.”
The geopolitical tensions have also boosted oil to seven-year highs. Brent crude was up 2.78% at $93.94 a barrel at 5.34pm , bringing the year-to-date gains to just more than 21%, which may be unfavourable for SA’s inflation outlook.
The rand, regarded as a gauge of risk sentiment, was resilient against the dollar in the context of heightened market jitters.
At 5.30pm, the rand had strengthened 0.58% to R15.1132/$, 0.94% to R17.0919/€ and 0.64% to R20.4533/£. The euro was 0.39% weaker at $1.13044.
The local currency has strengthened about 5.5% so far in 2022.
Gold was 0.49% firmer at $1,867.87/oz, while platinum was unchanged at $1,032.50/oz.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
MARKET WRAP: JSE tracks global markets weaker as geopolitical tension weighs on sentiment
Tension is increasing over Russia’s military build-up on Ukraine’s borders, boosting gold and oil, while weighing on riskier assets
The JSE was weaker on Monday, tracking mostly lower global markets as investors weighed up deepening geopolitical tensions in Eastern Europe. .
Tension is increasing over Russia’s military build-up near Ukraine, as the region enters a potentially decisive week, with the US warning that an invasion may be imminent.
Chief US equity strategist at Morgan Stanley Michael Wilson has warned that a potential Russian invasion could “tip several economies into an outright recession.”
“Stock markets are trading lower, while gold and oil markets surged on continued concerns over Russia invading Ukraine,” said Citadel Global’s Bianca Botes. “US intelligence officials warned on Sunday that an invasion might happen as soon as Wednesday. This does not bode well for any risky assets.”
The JSE all share lost 0.81% to 75,765 points and the top 40 0.79%. The precious metals and mining index rose 4.56% and resources added 0.92%. Industrials fell 2.17%, financials 1.15% and industrial metals and mining 0.8%.
Goldfields led the gains in the precious metals and mining index, with its share price rising the most since April 2020, up 10.96% to R184.44. AngloGold was 8.3% higher and Harmony added 6.36%.
“Gold counters have led precious metals higher as they catch up to late gains in the underlying commodity’s price on Friday,” said IG senior market analyst Shaun Murison.
After the JSE closed on Friday, gold rallied more than $20 an ounce.
It would appear that escalating geopolitical tensions between Russia and the Ukraine have spurred some safe-haven appeal, said Murison.
“What is interesting is that we saw gold rallying late last week despite renewed strength in the US dollar . Gold often displays an inverse relationship with the dollar and US Treasury yields. The fact that these asset classes were moving in tandem does support the suggestion of short-term safe-haven demand.”
The geopolitical tensions have also boosted oil to seven-year highs. Brent crude was up 2.78% at $93.94 a barrel at 5.34pm , bringing the year-to-date gains to just more than 21%, which may be unfavourable for SA’s inflation outlook.
The rand, regarded as a gauge of risk sentiment, was resilient against the dollar in the context of heightened market jitters.
At 5.30pm, the rand had strengthened 0.58% to R15.1132/$, 0.94% to R17.0919/€ and 0.64% to R20.4533/£. The euro was 0.39% weaker at $1.13044.
The local currency has strengthened about 5.5% so far in 2022.
Gold was 0.49% firmer at $1,867.87/oz, while platinum was unchanged at $1,032.50/oz.
tsobol@businesslive.co.za
Global markets slide as risk of war between Russia and Ukraine grows
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