The JSE closed weaker on Tuesday as investors weighed the prospect of tougher sanctions against Russia and the possibility of recession in the US.
US President Joe Biden said Russian leader Vladimir Putin could face a war crimes trial and vowed that Washington would impose additional sanctions in response to alleged atrocities committed by Russian forces against civilians in Ukraine.
Two EU officials, who did not want to be identified due to the sensitivity of the talks, said the European Commission would propose banning coal imports from Russia, CNBC reported on Tuesday. Imposing sanctions on Russian energy has been a challenge for the EU given some member countries’ high level of dependency on imports.
Brent crude, which jumped 3% on Monday on the prospect of tougher Russian sanctions, eased 0.5% to $107.03 a barrel by 6.17pm on Tuesday. Oil prices eased almost 10% last week on news that the US would tap its strategic reserves and renewed Covid-19 lockdowns in China.
Meanwhile, Deutsche Bank on Tuesday became the first major lender to forecast a US recession, noting that the world’s biggest economy is expected to “take a major hit from the extra Fed tightening by late next year and early 2024”.
The news led to a drop in global banks stocks and lenders were the biggest losers on the JSE, shedding 1.98%, while financials were down 1.42%. The JSE all share lost 0.72% to 75,286.61 points and the top 40 fell 0.87%.
Investors are assessing the Fed’s next move, awaiting the release on Wednesday of the minutes of its most recent meeting, in March, at which the central bank hiked rates for the first time in years and indicated there would be more this year.
“Markets will be watching for Ukraine headlines or sanctions headlines. We also have the Fed’s minutes on Wednesday which will most likely give direction,” Oanda senior market analyst Jeffrey Halley said. “So there are plenty of noise generators to come for financial markets, although I suspect when the dust settles, volatility, and not direction, will be the victor once again.”
At 6.42pm, the Dow Jones industrial average was 0.34% weaker at 34,802.02 points, while European markets were mixed.
At 6.14pm, the rand was 0.36% weaker at R14.638/$ and 0.36% at R19.1633/£, but it was 0.15% firmer at R15.9796/€. The euro was 0.5% weaker at $1.0917.
Gold lost 0.43% to $1,924.37/oz and platinum 1.67% to $973.
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