JSE faces mixed Asian markets, as oil climbs back above $100

The JSE, which has fallen for six of the last seven sessions, faces mixed Asian markets on Wednesday morning, with investor attention still focused on US monetary policy, the war in Ukraine and China’s Covid-19 outbreak.

Authorities have lifted restrictions for some residents in Shanghai, while Russia has poured cold water on the hope of progress in peace talks in Ukraine, both of which helped to contribute to a more than 5% rise in oil prices on Tuesday, putting it back above $100 a barrel.

Reports have also suggested Chinese authorities are looking to pilot looser quarantine restrictions, which would support demand for energy in the world’s second-largest economy.

“Sort of the light at the end of the tunnel trade, but oil bulls have fingers crossed that light is not a Chinese Covid freight train at the other end of the tunnel,” SPI Asset Management managing partner Stephen Innes said in a note.

The hard lockdowns in China on the rapid spread of Covid-19 are having a negative effect on the supply of goods and suppressing some commodity prices, while adding to global economic growth concerns and price pressures on some manufactured goods, Investec chief economist Annabel Bishop said in a note.

A protracted conflict in Ukraine, meanwhile, could lead to further sanctions against Russia, which as been accused of war crimes, putting additional pressure on energy prices.

In morning trade on Wednesday the Shanghai Composite was down 0.44%, while Japan’s Nikkei was up 1.7% and the Hang Seng 0.16%.

Tencent, which can influence the direction of the local bourse via the Naspers stable, gained 1.97%.

Gold was up 0.18% to $1,970.08/oz while platinum rose 0.61% to $974. Brent crude gave back 0.25% to $104.32 a barrel.

The rand was 0.2% firmer at R14.49/$, on track for a fourth consecutive session of gains, and hovering around its best level in about two weeks.

SA’s retail sales numbers for February are due later, with economists expecting year-on-year growth of about 5.5% from January’s strong 7.7% rise. The easing of Covid-19 restrictions has improved mall footfall, with data on transactional activity indicating that consumers were spending at a robust pace in February.

In corporate news, IT group EOH is expected to report that operating profit more than doubled in its six months to end-January, while it may also update the market on plans for a possible rights issue as it looks to settle some of its debt.

Agriculture-focused Zeder is also due to release its results for the year to end-February later, but it has not released a trading update.

gernetzkyk@businesslive.co.za