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Picture: 123RF/BLUE BAY
Picture: 123RF/BLUE BAY

The JSE is facing mixed Asian markets on Wednesday as stocks rose on the back of gains on Wall Street, but concern remains about central banks hiking interest rates, which could dampen global growth and increase the risk of stagflation.

The World Bank on Tuesday cut its forecast for global growth in 2022 by almost a third to 2.9% as it warned the war in Ukraine added to the damage from the Covid-19 pandemic. Many countries are facing a recession amid high inflation, central banks increasing interest rates and the price of oil soaring since the start of the war.

“The reality for the economy and probably the stock markets is that aggressive central bank rate hikes are likely to take a sharp bite out of household consumption as cost of living pressures come from goods and services, depressed real wage gains and markedly higher mortgage servicing,” Stephen Innes, managing partner at SPI Asset Management, said in a note.

US stocks rallied on Tuesday despite US treasury secretary Janet Yellen telling the Senate finance committee that the country has “unacceptable levels of inflation” and she expects it to remain high.

In morning trade, Japan’s Nikkei was up 0.93% and the Hang Seng 1.88%, while the Shanghai composite was down 0.43%.

Tencent, which can influence the JSE via the Naspers stable, rallied by 4.68% after China’s gaming regulator granted publishing licences to 60 games. Regulatory crackdowns have affected several Chinese tech companies, including the world’s largest gaming company.

The JSE closed weaker on Tuesday as interest rates and concern about global growth weighed on markets in the wake of an unexpectedly steep hike by Australia’s central bank.

US inflation data, due on Friday, and next week’s meeting of the Federal Reserve’s Federal open market committee are adding to the caution, analysts said.

After the release of SA’s GDP data for the first quarter of 2022, the focus will shift to the SA Chamber of Commerce and Industry (Sacci) on Wednesday, when it releases its business confidence index (BCI) for May. After indicating a faster recovery in January and February as the effects of the Covid-19 pandemic eased, SA business confidence slowed in March as the Russian invasion of Ukraine added to global business uncertainty. Trading Economics forecasting it will go down to 94.3.

The BCI declined to 95.6 in March from 96.9 the previous month, after improving by 2.8 index points between January and February. However, the general trend in business confidence during the first few months of 2022 remained positive.

Gold is down 0.26% at $1,847.89/oz, platinum 0.44% to $1,010.50. Brent crude is up 0.22% to $121.09 a barrel.

The rand was slightly down with 0.39% to R15.43.

The local corporate diary is bare, though wholesaler Spar will release its interim results on Wednesday for the six months to end-March after announcing in February it is halving its dividend payouts for the next two years to fund its expansion effort in Poland, after banks showed little interest in increasing its debt.

gousn@businesslive.co.za

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