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The JSE looks set to contend with mixed Asian markets on Tuesday morning, with investors digesting the latest sanctions by Europe on Russia, as well as an improving Covid-19 picture in China.

Europe has moved to cut 90% of its oil imports from Russia by the end of the year, something which has sent oil back above $120 a barrel, putting additional inflationary pressure on the eurozone.

Risk assets have, however, started the week off rather positively, boosted by easing Covid-19 numbers in major Chinese cities, offering hope of a return to normality in the world’s second-largest economy.

Data showed earlier the pace of contraction in manufacturing activity in China slowed in May, while business sentiment improved.

A less worse than expected set of data has prompted a modest rally in China equities, holding the promise of an accelerating recovery in June if the virus situation remains benign, Oanda senior market analyst Jeffrey Halley said in a note.

In morning trade the Shanghai composite was up 0.75% and the Hang Seng 0.43%, while Australia’s all ordinaries index was down 0.51% and Japan’s Nikkei flat.

Tencent, which can give direction to the JSE via the Naspers stable, gained 1.71%.

Gold was 0.23% weaker at $1,851.19/oz, while platinum was little changed at $959. Brent crude was 1.21% higher at $123.21 a barrel, on track for a ninth-consecutive session of gains.

In addition to the expected EU Russian oil ban, oil prices have been supported by expectations of a China reopening, National Australia Bank currency strategist Rodrigo Catril said in a note.

Famous Brands is due to release results for its year to end-February later, expecting a doubling of headline earnings per share (heps) from continuing operations as it recovers from the worst effects of Covid-19.

Fintech group Capital Appreciation is due to release its results for the year to end-March later, expecting heps growth of as much as 35% in a recent trading update and reporting new contract wins in its software business and continued demand for cloud services.



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