JSE could struggle on Monday as oil surges to $130 a barrel

The JSE must contend with a surging oil price and slumping Asian markets on Monday morning, amid concerns the West is gearing up to ban Russian oil and gas.

Russia has intensified its operations in Ukraine, with a US official confirming at the weekend further sanctions are being considered, something that has sent the oil price above $130 for the first time since 2008.

Russia is the world’s largest gas exporter and one of the largest oil exporters, with sanctions expected to deal an additional blow to a global economy already facing high energy prices and supply-chain difficulties.

The JSE struggled on Friday, losing more than 3%, but higher commodity prices have helped shield the local bourse from the global turmoil, with the JSE’s precious metals index up 28% so far in 2022, while Sasol has risen more than 40%.

Risk aversion on Monday is broad-based, SPI Asset Management managing partner Stephen Innes said in a note, as investors consider the inflationary effect off higher commodity prices and the effect on overall demand.

In morning trade on Monday Brent crude was up 9.55% to $129.22 a barrel, having risen by about two-thirds so far in 2022.

Japan's Nikkei was down 3.36% and the Hang Seng 3.34%, while the Shanghai Composite lost 1.48%.

Tencent, which influences the JSE via the Naspers stable, lost 2.78%.

Gold was up 0.97% to $1,988.81/oz while platinum rose 2.28% to $1,150.

The rand was little changed at R15.40/$, having slipped more than 1% on Friday.

Massmart, the owner of Makro, Game and Builders, is expected to report later that July's riots and looting pushed it into a loss of more than R2bn in its year to end-December 26.

Paper and plastics group Mpact is due to report a hefty rise in profits for its year to end-December later, saying it experienced robust demand across its businesses, as well as higher prices.

gernetzkyk@businesslive.co.za