JSE looks set to join positive Asian session as investors eye Fed guidance

The JSE looks set to join positive Asian markets on Friday morning, though caution is still expected to prevail ahead of a key speech from US Federal Reserve chair Jerome Powell later.

The speech at a gathering of central bankers will be closely watched as investors try gauge the path of interest rate hikes, and there are concerns that the Fed is preparing to implement an extended period of restrictive monetary policy in order to tame inflation.

The JSE still needs to lose about 0.9%, or about 600 points, to reach last week’s close, while the rand has gained about 20c.

Inflation data this week has come in slightly higher than expected, including producer inflation reaching an all-time high of 18% year on year in July.

“Rising producer inflation continues to threaten SA economic growth as business viability is threatened by margin squeeze, expect the monetary policy committee to continue on their hiking path in an effort to anchor rising inflation expectations,” said Sasfin Wealth fixed-income trader Alvin Chawasema in a note.

This prompted a resurgence in activity in the inflation-protection market, said Chawasema, but light volumes of trade should be expected ahead of Jackson Hole.

In early trade the Hang Seng was up 0.7%. Japan’s Nikkei 0.65%, and Australia’s All Ordinaries index 0.97%. The Shanghai Composite was flat.

Tencent, influential to the JSE, had slipped 0.25%.

Gold was little changed at $1,756.34/oz while platinum had risen 0.48% to $886.20. Brent crude was up 0.35% to $100.12 a barrel.

The rand was slightly weaker at R16.76/$, but it firmed more than 1% on Thursday.

Northam Platinum is due to report its results for the year to end-June later, amid a mixed profit performance, and headline earnings per share may fall or rise slightly. The group had to grapple with a difficult operating environment, including Covid-19 and community unrest and climbing costs. 

Logistics group Grindrod, which also has a bank for now, is due to release its results for the six months to end-June later, and it has flagged healthy volume growth, with its ports and terminal business more than growing its profits. Despite KwaZulu-Natal floods, it expects its core headline earnings to rise as much as 58% to R544m.

gernetzkyk@businesslive.co.za