JSE may struggle along with Asian markets on Thursday after Fed minutes

The JSE may be in store for another difficult session on Thursday, with Asian markets under pressure in the wake of the release of US Federal Reserve minutes.

The minutes showed that policymakers were contemplating a 50 basis point hike at their meeting in March, but the uncertainty stemming from the war in Ukraine stayed their hand.

Analysts noted that hawkish comments by Fed officials earlier in the week had already set the table for the minutes, while the JSE has also been under pressure for the past three sessions. Adding to concerns are the prospect of more stringent sanctions against Russia, while China continues to grapple with Covid-19, with lockdowns in Shanghai having been extended.

The macroeconomic backdrop remains “very choppy” with equity and foreign exchange markets on the defensive amid further weakness in tech and a well-supported dollar, SPI Asset Management managing partner Stephen Innes said in a note.

The Fed’s balance sheet’s run-off was flagged, but uncertainty around central bank reactions remains high, he said.

The European Central Bank (ECB) has stressed not overreacting to inflation, while in China, policymakers are looking to offset economic pressure from Covid-19, while inflation is lower, said Innes, helping to explain recent strength in the dollar.

In morning trade the Shanghai Composite was down 0.99%, the Hang Seng 1.31%, and Japan’s Nikkei 1.85%.

Tencent, which influences the JSE through the Naspers stable, had given back 1.21%.

Oil was up 1.15% to $102.64 a barrel, but had slipped about 3.6% on Wednesday. 

Gold was 0.18% weaker at $1,921.85/oz while platinum had given back 0.31% to $951.

The rand was 0.15% weaker at R14.69/$.

The local corporate calendar is bare in terms of financial reports on Thursday, while SA’s foreign exchange reserves data for March is due later, having risen in February amid strong commodity prices.

gernetzkyk@businesslive.co.za