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

The JSE could struggle to recover Monday’s losses on Tuesday, facing continued Asian market pressure, as investors fret about expected US inflation numbers and corporate earnings reports.

Investors are hoping to see consumer and producer inflation numbers that point to a deceleration in price pressures, something which would reduce expectations of future interest rate hikes.

Numerous US firms, notably banks, will report this week on second-quarter earnings which could indicate how well they are faring amid the economic uncertainty.

“We’re back in risk-aversion mode at the start of the week with equities sliding, tech getting crushed and the dollar reigning supreme,” Oanda senior market analyst Craig Erlam said in a note.

“While the jobs report on Friday highlighted that the US is faring better than the rest in the race to avoid a recession, the rest of the world is sinking under the weight of a cost-of-living crisis and higher interest rates,” Erlam said.

The rand was 0.28% weaker at R17.12/$ in early trade, breaking through the psychologically important R17/$ level for the first time since 2020 on Monday. The local currency has lost 8% against the greenback in the past month amid general dollar strength and is approaching parity with the euro for the first time in two decades.

Twitter lost more than 11% on Monday as the market reacted to news that a legal battle is in the offing due to Tesla CEO Elon Musk seeking to pullout of his proposed takeover of the social media firm.

In morning trade Japan’s Nikkei was down 1.86%, the Hang Seng 1.2% and the Shanghai Composite 1.1%. Tencent, which can give direction to the local bourse through the Naspers stable, had lost 1.5%.

Gold was flat at $1,732/oz, while platinum fell 1.49% to $859. Brent crude was down 0.69% to $105.52 a barrel.

The local corporate calendar is bare on Tuesday, while manufacturing numbers for May are due and are expected to show factories were recovering from the devastating floods in KwaZulu-Natal in April. Manufacturing slumped 7.8% year on year that month.

gernetzkyk@businesslive.co.za

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