The JSE closed firmer amid mixed global markets on Tuesday as a resurgence of Covid-19 in Europe weighed on sentiment.
Markets traded cautiously as investors considered the effects of tighter Covid-19 lockdown restrictions in Europe, as well as US President Joe Biden’s decision to stick with Jerome Powell as the US Federal Reserve chair for a second term.
While some analysts view the reappointment of Powell as positive in that the central bank will stay on its monetary path as the world’s biggest economy recovers from the pandemic and attempts to combat inflation, others are more hawkish.
“Powell has been seen by markets to be the more hawkish of the two candidates [the other being Lael Brainard], thus confirming markets’ increasing expectations that US rate hikes will begin in 2022,” said RMB economist Siobhan Redford.
In Europe, a lockdown in Austria and the risk of other countries following suit, is further darkening the outlook there.
Germany’s departing chancellor Angela Merkel said on Tuesday that the latest surge in infections was “worse than anything” the country had experienced, and called for tighter restrictions to help tame the spread.
“Global stock indices are mixed, which is a good guide as to the uncertainty in the market as we await the impact of the next round of lockdowns in Europe,” TreasuryOne currency strategist Andre Cilliers said. “Markets also worry that the coming fourth wave — infections particularly for countries with relatively low vaccination rates — could have a significant impact, with most up until now focused more on inflation concerns than a fourth wave’s growth impact.”
The JSE all share gained 0.21% to 71,015 points and the top 40 added 0.28%. Industrial metals rose 2.33% and resources 1.64%. Precious metals lost 0.77% and industrials 0.55%.
At 6.10pm the Dow Jones industrial average was unchanged at 35,615 points. In Europe, the FTSE 100 was up 0.26%, while France’s CAC 40 had lost 1.15% and Germany DAX 1.2%.
The rand reached an intraday worst of R15.94/$, hovering near a one-year low after losing almost 1% on Monday. At 6.10pm, it was 0.4% weaker at R15.88969/$, 0.52% to R17.9012/€ and 0.19% to R21.2356/£. The euro was unchanged at $1.1245.
“Financial markets are adjusting to the new risks building, spurring safe-haven flows and seeing the rand under pressure,” said Investec chief economist Annabel Bishop.
Gold fell 1.21% to $1,783.02/oz and platinum 5.04% to $962.91. Brent crude rose 2.55% to $81.52 a barrel.
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