JSE faces muted Asian markets on Friday as investors mull Fed outlook

The JSE looks set to join mixed, but subdued Asian markets on Friday, with investors still contemplating just how aggressive global central banks will need to be in order to tame inflation.

US markets could be in store for a fifth week of gains this week, with markets buoyed recently by strong corporate earnings reports, as well as hopes that a series of further hefty interest rates will not be needed.

Minutes from the US Federal Reserve’s last meeting, however, showed clear concern that inflation is not moderating, with policymakers willing to act quickly in order to anchor expectations and return inflation to its 2% target.

This has raised concerns of a downturn in activity, with economic activity sparking volatility.

“Markets remain hyper-focused on the monthly data releases to determine how the Fed will act going forward,” said Sasfin Wealth fixed-income trader Alvin Chawasema in a note.

“For now, both sides of the entrenched inflation and growth debate don’t have irrefutable evidence and so we continue to witness market indecision,” he said.

The JSE will need to lose about 0.4% on Friday to reach last week’s close, and has been buoyed by positive reports from miners this week, including Thungela and Exxaro, the former lifting more than 15%.

In early trade the Shanghai Composite and Japan’s Nikkei were both flat, while the Hang Seng had gained 0.45%.

Tencent, important to the JSE due to the Naspers stable, had gained 1.92%.

Gold was down 0.32% to $1,752.58/oz while platinum was flat at $908.70. Brent crude had fallen 0.35% to $96.16 a barrel.

The rand was 0.35% weaker at R16.91/$.

SA’s second-most valuable bank, Standard Bank, is due to report its half-year results to end-June later, flagging a rise in interest rates of as much as 32% recently. SA’s banks have benefited in recent months from rising interest rates, with the economy also getting a lift from strong commodity prices.

gernetzkyk@businesslive.co.za