The JSE faces mixed Asian markets on Friday as the number of new Covid-19 cases continue to rise in mainland China and US markets were closed on Thursday, while investors digest the latest interest rate hike from the SA Reserve Bank.
The Shanghai composite edged up 0.39%, while the Hang Seng in Hong Kong and the Nikkei in Japan shed 0.86% and 0.34%, respectively.
Year to date, the Hang Seng is down almost one-quarter (24.77%), the Shanghai composite 14.62% and the Nikkei 3.46%.
Tencent, which influences the JSE via Naspers and Prosus, fell 3.71% on Friday and 40.50% in 2022.
The bourse in Shanghai was up despite fears over Covid-19 amid a surge in new cases in the country as many cities implemented lockdowns, casting doubt over the plans of the world’s second-largest economy to reopen. Life has also been disrupted in the capital, Beijing.
Traders in Hong Kong are also worried about the economic outlook of mainland China.
“Meanwhile, Chinese newspapers are suggesting the People’s Bank of China may cut banks’ reserve requirement ratio as early as today as fresh Covid outbreaks fuel concerns about the sluggish economic recovery,” National Australia Bank (NAB) currency strategist Rodrigo Catril said in a note on Friday.
“This time, the spread of cases is across a wider range of cities and lockdown efforts have been less strict. We’re doubtful the outbreak can be successfully contained and expect some economic disruption as the country learns to live with Covid-19, just as every other country has: some short-term pain for long-term gain,” Bank of New Zealand senior market strategist Jason Wong said in a note.
In local markets, the rand weakened slightly on Thursday after the SA Reserve Bank hiked interest rates for a third straight time, while the JSE posted slim gains.
The Bank raised the repo rate by 75 basis points, in line with the forecasts of economists surveyed by Bloomberg, taking the benchmark borrowing indicator to 7%, higher than it was before the start of the coronavirus pandemic.
The JSE all share gained 0.18% to 73,023.39 points and the top 40 added 0.16%. Precious metals were up 0.48%, resources 0.21%, industrials 0.21% and industrial metals 0.2%. Banks and financial indices were little changed.
Globally, investors took some comfort from the minutes of the most recent Federal Reserve meeting, which indicated officials at the central bank may soon moderate the pace of interest-rate increases in the world’s biggest economy.
US markets were closed on Thursday for the Thanksgiving holiday. On Wednesday, the Nasdaq accelerated 0.99%, the S&P 500 0.59% and the Dow Jones 0.28%.
The rand strengthened 0.27% against the dollar and remained below the R17/$ mark as it traded at R16.97. The rand has depreciated by 6.38% against the greenback this year.
In commodities, the price of platinum increased 0.69% to $992.80, Brent crude 0.64% to $85.55 a barrel and gold 0.22% to $1,759.01/oz.
On the corporate news front, poultry group Quantum Foods will release its annual results, with headline earnings per share, a profit measure that strips out impairments and one-off items, expected to drop 68%-78% year on year to 11.5c-16.7c.
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