The JSE was weaker on Wednesday morning, with its global peers mixed as investors evaluated the economic risks from the Delta variant.
Investors are adopting a more risk-off approach after economic data this week indicated the world’s two largest economies had shown signs of short-term weakness, said Oanda senior market analyst Edward Moya.
China’s purchasing managers index (PMI) readings showed that Chinese factory activity slowed in August, indicating that the world’s second-largest economy took a hit from the Covid-19 Delta variant outbreak. The country’s manufacturing sector delivered its weakest reading since February 2020, while the service sector posted its first contraction in 16 months.
In the US, consumer confidence fell faster than expected. The August confidence reading plunged to the lowest level since February, a sign that analysts believe that supply chain weakness will continue due to the effects of the Delta strain.
“China’s PMI readings raised concerns that the Delta variant hit, while the Delta variant impact on the US economy might be greater than initially anticipated and that won’t bode well for third-quarter spending. Investors may view the recent weakness across the US consumer and both China’s manufacturing and service sectors as temporary, and [probably] a catalyst for both the Fed and PBOC [People’s Bank of China] to remain on the offence with support,” said Moya.
Meanwhile in SA, a new variant has been detected, as well as in some parts of Africa, Europe and Asia. However, researchers are yet to determine its level of transmissibility or severity.
At 9.40am, the JSE all share had lost 0.15% to 67,325.31 points and the top 40 0.24%. Industrials had firmed 1.37%, financials 0.82% and banks 0.77%. Industrial metals had lost 4.60% and resources 2.96%.
At the same time in Europe, the FTSE 100 had gained 0.93%, France’s CAC 40 1.07% and Germany’s DAX 30 0.79%.
Earlier, the Shanghai Composite added 0.65%, Hong Kong’s Hang Seng 0.47% and Japan’s Nikkei 225 1.29%.
At 9.31am, the rand had strengthened 0.55% to R14.4287/$, 0.66% to R17.0262/€ and 0.61% to R19.8455/£. The euro was unchanged at $1.1799.
Gold lost 0.11% to $1,811.40/oz, while platinum gained 0.16% to $1,014.63. Brent crude was 0.64% firmer at $72.13 a barrel.
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