JSE to open to lower Asian markets on Monday amid Chinese concerns

The JSE looks set to start off the new week on a negative note, with Asian markets under strain as investors consider rising inflation and continued lockdowns in China.

Chinese producer and consumer inflation figures for March were both higher than expected, with producer inflation climbing above 8%. The world's second-largest economy is also battling with its worst wave of Covid-19 since early 2020, raising concerns about further economic disruption due to the country's zero-tolerance approach.

The war in Ukraine has pushed up energy prices as China's lockdown disrupts food supplies and shutters factories. Markets were under pressure last week as well amid hawkish signals from the US Federal Reserve, which has indicated it will act aggressively to rein in rising inflation.

“Global markets are in recession obsession mode,” said SPI Asset Management managing partner Stephen Innes in a note. Global markets have however been resilient, he said, with the focus now on US inflation data for March on Wednesday.

In early trade the hang seng was down 2.45%, the Shanghai composite 1.75%, and Japan's nikkei 0.85%.

Tencent, which influences the JSE via the Naspers stable, lost almost 3%.

Gold was down 0.29% to $1,941.70/oz while platinum rose 1.4% to $976.01. Brent crude was 1.81% lower at $100.29 a barrel.

The rand was flat at R14.67/$.

The local corporate calendar is bare on Monday, while manufacturing numbers for February are due later. Expectations are that activity grew about 2.9% year on year in the second month of the year, a pace unchanged from January, and sentiment had been bolstered by the receding threat of Covid-19.

gernetzkyk@businesslive.co.za