JSE could benefit from recovering Asian markets on Thursday
Easing US treasury yields and softer-than-expected US core inflation is seen to be supporting equities after their recent selloff
The JSE, which has spent seven of the past eight sessions trending lower, could benefit from a recovery of US and Asian markets on Thursday morning, with US treasury yields easing back from three-year highs.
The reasons for this were not immediately clear, National Australia Bank head of foreign exchange strategy Ray Attrill said in a note, but it could be a follow through from softer-than-expected US core inflation data on Tuesday.
The common thread across all asset markets last week was the seemingly relentless rise in US treasury yields — at both ends of the yield curve — that were pressuring equities and lifting the dollar, a theme that continued into the early part of this week, said Attrill.
Bond yields move inversely to prices, and softer inflation could reduce the pace or severity of interest rates hikes in the US.
Investors often consider selling bonds when higher interest rates are on the way, as the set rate current bonds pay becomes less attractive.
US markets were higher overnight, with the focus turning to earnings season; various banks are set to report later.
In early trade Japan’s Nikkei was up 1.12%, the Shanghai Composite 0.73% and the Hang Seng 0.37%.
Tencent, which can give direction to the JSE through its largest single shareholder, the Naspers stable, had gained 0.48%.
Gold was down 0.17% to $1,974.56/oz while platinum was little changed at $987.50. Brent crude was flat at $108.27 a barrel.
The rand was flat at R14.53/$, while the yield on SA’s benchmark 10-year bond had ended Wednesday little changed at 9.71%.
The local corporate calendar is bare on Thursday, and trade may be subdued ahead of the long weekend, given high levels of uncertainty stemming from the war in Ukraine and China’s Covid-19 outbreak.
SA mining data for February is due later, with both manufacturing and retail sales data for the same month having already disappointed this week.
Absa economists expect a 0.4% month-on-month rise in mining production in February, which would take production back to November levels.
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