JSE faces market pressure on Tuesday as investors eye Fed moves

The JSE faces mostly weaker Asian markets on Tuesday morning, after sharp losses in the US overnight, with focus still very much on recession risks and future monetary policy.

There was a big hit to risk appetite in a night devoid of any top-tier data, and instead markets are apprehensive ahead of US Fed chair Powell’s Jackson Hole speech on Friday, National Australia Bank economics director Tapas Strickland said in a note.

“Hawkish signals from Fed officials recently, as well as hawkish words from the European Central Bank about hiking even with growing recession risks in Germany has led to a reassessment of the markets view on rates,” he said.

The Dow Jones index and S&P 500 both lost about 2% on Monday, but have been buoyed in recent weeks by hopes that inflation has peaked, even as many major firms have positively surprised in terms of their recent profits.

Minutes from the Fed’s meeting last week, however, indicated the world’s most influential central bank wants to move rapidly to tame inflation, as well as anchor expectations in the market.

In morning trade on Tuesday the Shanghai Composite was up 0.18%, while Japan’s Nikkei was down 1.08% and the Hang Seng 0.47%.

Tencent, important to the JSE due to Naspers, was flat.

Gold was up 0.18% to $1,738.44/oz, while platinum fell 0.19% to $875.80. Brent crude was 0.47% higher at $97.11 a barrel.

The rand was little changed at R16.97/$.

Unemployment numbers for the second quarter are due later, having come in at 34.5% in the first three months of the year.

SA’s leading business cycle indicator for June, which points to economic activity in coming months, is also due for June. It measured 124.7 points in May, down from 125.6 points previously.

Chemicals and energy group Sasol is due to release its results for its year to end-June later, saying in a recent trading update profits will rise by more than half, boosted by higher commodity prices.

Construction group Aveng is due to report its headline earnings more than halved in its year to end-June later, after one-off boosts in the previous year, for example, early settlement of borrowings, as well as depreciation charge in the current period.

gernetzkyk@businesslive.co.za