The JSE was weaker on Wednesday morning, while its global peers were mixed as investors weighed up China’s easing Covid-19 curbs against inflation pressures.
Shanghai has eased a range of Covid-19 restrictions in a step towards returning to normal after a two-month lockdown. China’s commercial hub was closed down in sections from late March, when the Omicron virus variant fuelled the country’s worst outbreak since Covid-19 first took hold in 2020. Factories and businesses are set to restart work after being dormant for weeks.
June marks a new month for trade after a volatile May, when inflation concerns and the fear of a recession weighed on riskier assets, though a recovery was staged towards the end of the month.
Inflation in the eurozone accelerated to 8.1% month on month in May — faster than expected — while markets are also considering news of a partial ban on Russian oil imports, which could add to price pressures.
“Equity markets are trading with a mixed tone today, with the ending of virus restrictions in Shanghai having little to no positive impact. Mostly that is due to the flip-flop of the day in US markets, which reopened overnight. New York decided overnight to be nervous about Fed tightening once again, having dismissed it last week. Tomorrow, they may decide it's not a problem once again, who knows,” Oanda senior market analyst Jeffrey Halley said.
“Much has been made of the ending of Shanghai virus restrictions today, with many seeming to think it offers an instant panacea to China's economic slowdown,” said Halley. “Unfortunately, I must add a word of caution here. As other countries with Covid-19-zero strategies have found out, the country needs to get lucky 100% of the time [while] the virus only needs to get lucky only once. Any returning outbreaks in Beijing or Shanghai or Shenzhen etc, will put China back to square one.”
At 10.20am, the JSE all share had lost 0.8% to 71,520.24 points and the top 40 was down 0.91%. Precious metals had fallen 2.41%, resources 1.8%, industrial metals 1.69% and banks 0.49%.
At the same time in Europe, London’s FTSE 100 had lost 0.36%, while France’s CAC 40 and Germany’s DAX were little changed.
Earlier in Asia, the Shanghai Composite lost 0.13% and Hong Kong’s Hang Seng 0.62%, while Japan’s Nikkei gained 0.65%.
At 9.39am, the rand had strengthened 0.34% to R15.5646/$, 0.39% to R16.6899/€ and 0.17% to R19.6291/£. The euro was little changed at $1.0724.
Gold lost 0.16% to $1,834.30/oz, while platinum gained 0.72% to $978.98. Brent crude was 0.87% firmer at $117.23 a barrel.
With Karl Gernetzky
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