JSE faces mostly positive Asian markets as investors digest Fed minutes

The JSE faces mixed, but generally positive, Asian markets on Thursday morning, with investors digesting hawkish US Federal Reserve minutes and a recent easing of commodity prices.

The Fed minutes showed policymakers are committed to reining in inflation, even at the expense of economic growth, but recent falls in commodities, including energy, maize, soya, iron ore and copper have helped contain future inflation expectations.

This is raising the prospect of the Fed easing back on future interest rate hikes, though SPI Asset Management managing partner Stephen Innes said in a note that he was surprised market expectations of Fed hikes have remained steady.

“However, we should take these small wins as the fall in oil prices has likely sent the volatility index to the lowest level in a month; hence fear is coming out of the market, which is positive for stocks,” he said.

Markets are still pricing in another 75 basis point Fed hike in July, Bloomberg reported, but the peak of the tightening cycle in early 2023 is now seen at about 3.4% from about 3.2% previously.

Local focus remains on load-shedding, with stage 5 scheduled for the afternoon, while attention is also on the UK, where Prime Minister Boris Johnson is struggling to hold on to his leadership, and there is the prospect of an early general election.

There has been a spate of resignations from Johnson’s administration recently, though he has indicated he will not quit.

In morning trade the Shanghai Composite was up 0.53% and Japan’s Nikkei 0.73%, while the Hang Seng was down 0.35%.

Tencent, which influences the JSE via the Naspers stable, had gained 0.29%.

Gold was up 0.46% to $1,745.75/oz while platinum had gained 0.41% to $860. Brent crude was 1.6% higher at $101.29 a barrel, having still lost almost 10% over the past 10 days.

The rand was 0.3% firmer at R16.74/$, having weakened 7.4% over the past month.

The local corporate calendar is bare on Thursday, while in economic news, data on SA’s foreign reserves for June is due later. Falling commodity prices contributed to reserves easing in May from a record high reached in April.

gernetzkyk@businesslive.co.za