JSE faces mixed markets as Poland attack causes tension

The JSE is facing mixed Asian markets on Wednesday amid new geopolitical tensions after two people were killed in a missile attack in Poland near the border of Ukraine of what is believed to be a Russian-made weapon.

However, US president Joe Biden said on Wednesday after an emergency meeting at the G20 summit that the missile was probably not fired from Russia.

The Nikkei in Japan is up 0.25%, while the Hang Seng in Hong Kong is down 1.14% and the Shanghai composite in mainland China 0.22%. Year to date, the Hang Seng is down 22.09%, the Shanghai composite 13.90% and the Nikkei 4.24%.

Tencent, which influences the JSE via Naspers and Prosus, dipped by 1.67% and has fallen by 37.59% in 2022.

The tensions saw sentiment make a U-turn in Hong Kong, halting gains from the previous sessions with reports suggesting the missile was fired from Russia.

In mainland China, three economic indicators missed their October estimates, because of the slowdown in economic growth and rising Covid-19 cases in the world’s second-largest economy.

“Investors chose to ignore the softer-than-expected China activity readings, probably judging that the weakness in the economic readings were yet another reason to expect Beijing to provide more support to its beleaguered economy,” National Australia Bank (NAB) currency strategist Rodrigo Catril wrote in a note.

“The government’s recent plan for more targeted restrictions will help the medium-term outlook, but could result in greater near-term economic disruption,” Bank of New Zealand (BNZ) senior market strategist Jason Wong wrote in a note.

US investment bank JPMorgan also downgraded its economic growth forecasts for mainland China in 2022 and 2023 from 3.1% to 2.9% for 2022 and 4.5% to 4% for 2023.

In Japan, traders were also affected by the turmoil despite Wall Street ending higher overnight and new US inflation data coming in lower than expected.

The producer price index (PPI), a measure of wholesale inflation, rose 0.2% month on month in October, below the market consensus estimate of 0.4%. The report from the US Bureau of Labor Statistics (BLS) comes less than a week after better-than-expected CPI data, stoking optimism that price pressures could be easing.

“The US Federal Reserve is unlikely to acknowledge the progress that is being made so quickly, and we don’t think they will change their tune much,” ING’s Robert Carnell and Iris Pang wrote in a note.

JSE upbeat, rand weaker

In local markets, the JSE ended firmer after a see-saw session on Tuesday as investors also assessed the US inflation report.

The JSE gained 0.24% to 72,998.69 points and the top 40 was also firmer, adding 0.36%, but banks, financials and retailers fell 2.08%, 1.89% and 1.3%, respectively.

US markets were upbeat on Tuesday with the Nasdaq climbing 1.45%, the S&P 500 0.87% and the Dow Jones 0.17%. The Nasdaq has lost 28.26% of its value in 2022, the S&P 500 16.78% and the Dow Jones 8.18%.

The rand weakened by 0.36% against the dollar, trading at R17.37. The rand has depreciated by 8.89% against the greenback this year.

Commodity prices traded lower with the price of gold decreasing by 0.39% to $1,771.18/oz, Brent crude 0.33% to $93.38 a barrel and platinum 0.26% to $1,009.90.

In local corporate news, hospital group Mediclinic, diversified real estate investment trust (Reit) Dipula Income Fund (DIB), maritime transportation services group Grindrod Shipping (Grinship), Poland-based real estate group Globe Trade Centre (GTC) and Investec Property Fund (IPF), with an investment portfolio of direct and indirect property assets in SA and Europe, will all release results.

In terms of economic data, SA Chamber of Commerce and Industry (Sacci) will release its Trade Conditions Survey for October.

At 1pm, Stats SA will publish the latest retail trade sales for September. Retail sales’ growth slowed to 2.0% in August, below market forecasts of a 4.2% rise and after an upwardly revised 8.9% jump in July, reflecting the low base created by lockdown restrictions and social unrest in July 2021.

Investec expects retail sales to contract 0.8% year on year in September, because of more power cuts, which may have weighed on retailers’ ability to operate optimally while also weighing heavily on consumer confidence.

gousn@businesslive.co.za