JSE faces tumbling Asian markets on Tuesday as recession fears build

The JSE looks set for another day of market pressure on Tuesday, and should it extend losses its year-to-date fall will exceed 10%.

The US benchmark S&P index closed in a bear market overnight, defined as a more than 20% fall from its recent high, while the US Nasdaq slumped almost 5%, with the market now betting that US Federal Reserve policymakers will contemplate a 75 basis point hike this week.

Hotter-than-expected US consumer inflation inflation numbers on Friday have spooked markets, disappointing those hoping the data would show price pressure and are peaking in the world’s largest economy.

Adding to concerns is a flare-up of Covid-19 cases in China where further lockdowns may cause additional damage to a global growth environment that has already deteriorated in 2022.

The JSE lost 2.1% on Monday, its worst day in over a month and has spent the last five sessions trending lower.

The Fed’s interest rate announcement is on Wednesday, while later on Tuesday US producer inflation data for May are due, and could be market moving. Economists expect producer inflation to moderate slightly from April’s 11% year-on-year rise.

In morning trade on Tuesday Australia’s All Ordinaries index was down 4.68%, Japan’s Nikkei 2.02%, the Shanghai Composite 1.6% and the Hang Seng 0.91%.

Tencent, which influences the JSE via Naspers, had lost 1.5%. 

Gold was up 0.42% to $1,842.69/oz, while platinum was up 1.15% to $943. Brent crude was flat at $121.99 a barrel.

The rand was 0.61% firmer at R16/$, breaching that psychologically-important mark for the first time in almost a month on Monday.

SA’s third-largest mobile operator Telkom is due to release its results for its year ended March later, but has not released a recent trading update. The local economic calendar is bare.

gernetzkyk@businesslive.co.za