JSE likely to head higher as it catches up with world markets after public holiday

The JSE is likely to strengthen on Tuesday as the all share index catches up with other world markets after the public holiday.

Brent crude was nearly 3% higher to $118.84 a barrel in early trade, from $106 on Friday.

However, the rand was resilient in the face of a strong dollar after US Federal Reserve chair Jerome Powell laid the groundwork for potentially bigger increases in interest rates to head off inflation, which is running at four-decade highs.

Until Monday, markets were expecting increases of 25 basis points at each of the Fed’s six remaining meetings for 2022.

Powell’s hawkish comments sent the yields on benchmark US 10-year treasury notes to their highest level since May 2019, boosting the value of the dollar in the process. In early trade, the US 10-year yields stood at 2.3350%.

The rand, meanwhile, weakened just slightly to trade at R14.97/$. The rand’s resilience was boosted by the recent surge in commodity prices, such as coal, platinum group metals (PGMs) and gold. The currency is up 2.5% against dollar so far in March, taking its gains this year to 6%.

The rand’s relative strength could partially offset the effect of higher international oil prices.

Elsewhere, stocks were about 1% higher in Asia, despite a weaker session on Wall Street.

Investors have used the recent selling of stocks as a buying opportunity, suggesting that the war in Ukraine may have been discounted.

mahlangua@businesslive.co.za