JSE set for another volatile session as peace talks continue

The JSE was set for another volatile session on Tuesday given the erratic behaviour of global markets sparked by the Russia-Ukraine war.

Brent crude fell 4% to $102 a barrel in early trade as the hefty premium built into oil prices unwound amid hopes of a ceasefire in Ukraine. Brent crude touched $139 a barrel seven days ago, the highest in 14 years. 

The palladium price stabilised after dropping 15% on Monday in its biggest one-day drop since the start of the Covid-19 pandemic, weighing on JSE-listed platinum group metals stocks.  Palladium was up 0.52% to $2,394oz on Tuesday morning. The crippling sanctions against Russia, which accounts for more than a third of palladium production, had earlier raised supply concerns.

“A collapsing Russian economy on the global economy is relatively small and not all economic linkages of countries are the same, but the outsize role played via the supply of certain key commodities coupled with unanticipated secondary effects are significant,” said Fabian de Beer, chief risk officer at Mergence Investment Managers. “The war and its attendant sanctions are already hampering global growth via surging commodity prices, oil in particular.”

The rand was relatively stable despite the pullback in platinum group metal prices. It fetched 15.10/$.

The value of Tencent shares was down another 5% amid concerns of regulatory crackdown by China’s authorities on the technology titan. The drop could have a ripple effect on Naspers, which has a 29% interest in Chinese company.

Naspers, which is Africa’s most valuable company, lost 13% of its value as Tencent shares shed 10%. This was after The Wall Street Journal reported that WeChat Pay was accused by China’s central bank of violating rules against money laundering. The People’s Bank of China had found Tencent’s payments platform allowed the transfer of funds for illicit purposes, such as gambling.

As a result, Hong Kong’s Hang Seng index was down 3% in early trade on Tuesday, but Japan’s Nikkei 225 gained 0.30%.

mahlangua@businesslive.co.za