The JSE closed marginally weaker on Monday, while its global peers were mixed as investors assessed rising US Treasury yields and looked ahead to the release of corporate earnings from tech industry giants.
The yield on the 10-year US Treasury note rose above 5% in early US trade, reclaiming a peak recorded last week that marks the highest point for the yield benchmark since 2007, reported Bloomberg.
Yields have touched these levels on concerns about interest rates staying higher for longer after US Federal Reserve chair Jerome Powell gave hawkish signals in a speech at the Economic Club of New York last week.
This week a slew of big tech companies are set to release reports as earnings season continues. Microsoft and Alphabet earnings are due on Tuesday, Meta Platforms on Wednesday and Amazon on Thursday.
“Markets are trying to understand how the US economy will be able to deliver a soft landing as Treasury yields trade at cycle highs. With the 10-year Treasury yield crossing the 5% level, it is clear that ‘higher for longer’ is here to stay,” said Oanda senior market analyst Edward Moya.
“Yields are a few percentage points above the Fed’s target and that means parts of the economy are headed towards a recession,” added Moya. “Stocks are struggling given the bond market sell-off and as risks grow over escalation with the Israel-Hamas war.”
The JSE all share lost 0.14% to 70,100.28 points and the top 40 0.4%. Retailers rose 2.18%, banks 1.15%, financials 0.88%, and food producers 0.73%. The precious metals and mining index fell 4.35%, resources 2.27% and industrial metals 1.04%.
At 6pm local time, the Dow Jones industrial average was little changed, while the FTSE 100 had lost 0.37%, France’s CAC 40 gained 0.5% and Germany DAX was unchanged.
Investors continue to watch the Israel-Hamas conflict, with recent reports indicating Israel has held back from starting a ground invasion of Gaza.
The violence in the Middle East has raised concerns that oil supplies from the region may be cut, encouraging investors to safe haven assets such as gold, reported Bloomberg.
The rand reversed the session’s losses, touching an intraday best of R18.90 against the dollar. At 5.49pm, the rand had strengthened 0.34% to R18.9183/$, but weakened 0.14% to R20.1416/€ and 0.38% to R23.1463/£. The euro was 0.51% firmer at $1.0646.
Gold lost 0.35% to $1,974.03/oz, while platinum gained 0.13% to $897.6/oz. Brent crude was 1.55% weaker at $90.89 a barrel.
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