JSE could be in for another bumpy ride as geopolitics rumbles on

The JSE was poised for another bumpy ride on Friday as the military conflict between Russia and Ukraine continued unabated.

However, the SA markets have been insulated against steep global market sell-offs, thanks to higher commodity prices.

The all share was hovering near record levels, boosted mainly by stocks of mining companies that stand to benefit from elevated metal prices.

The barrage of sanctions against Russia, which accounts for about 40% of palladium production, has raised supply worries. It is also a significant producer and exporter of other minerals and soft commodities, notably wheat.

The leading gauge of SA banking stocks was its highest since mid-June 2019, indicating the resilience of the SA markets.

The rand was slightly lower on the day at R15.23/$, but was stronger compared with levels of R15.56/$ touched on Wednesday

However, the invasion has exacted a significant toll on paper and packaging group Mondi and industrial group Barloworld, which have lost 23% and 21% of their market value respectively since the start of the military showdown a week ago. Both companies have operations in Russia.

“While there is some hope that talks between the two countries can yield a breakthrough, it’s tough to see where a compromise can be found or whether Russia is even interested in one,” said Craig Erlam, senior market analyst at Oanda.

“It was involved in talks before it crossed the border and it is clear now that there was no intention to find a diplomatic solution.”

Brent crude was up 2% to $112 per barrel, having climbed down from $119.84 on Thursday, which marked its highest level in almost a decade.

The steeper oil prices could mean higher fuel prices at the pump in the near term.

mahlangua@businesslive.co.za