JSE may start on a positive note ahead of repo rate announcement

The JSE could benefit from positive sentiment in global markets on Thursday, with markets welcoming an easing of concerns over Chinese property giant Evergrande, and digesting the US Federal Reserve’s latest policy announcement.

An agreement between Evergrande and its bond holders for payments due on Thursday has helped allay concerns that a collapse is imminent, which would have spillover effects for the rest of the market. China’s central bank has also injected liquidity into the market, reducing contagion fears.

The Fed on Wednesday indicated it was in no rush to pare back monetary support, with Covid-19 still the biggest factor for the economic trajectory of the world’s largest economy. This has pushed back expectations of a firm policy announcement in November, analysts said.

The Reserve Bank is due to announce its latest policy stance later on Thursday, with consensus that the repo rate will be left unchanged at 3.5%. Analysts have pointed to inflation hovering around the 4.5% midpoint of the Bank’s target band as a reason interest rate increases should be expected only in 2022, given policymakers would also want to support SA’s economic recovery.

In morning trade, the Hang Seng was up 0.69% and the Shanghai Composite 0.58%.

Tencent, which gives direction to the JSE via Naspers, had risen 1.56%.

Gold was 0.18% lower at $1,764.60/oz, while platinum was flat at $994.79. Brent crude was 0.71% higher at $76.38 a barrel.

The rand was 0.13% firmer at R14.79/$, having risen by a similar amount on Wednesday.

Restaurant group Spur is due to release its results for the year ending June later on Thursday, having said in a recent trading update it has seen a steady recovery, though profits remain under pressure. Group revenue picked up 1%, but comparable headline earnings per share is expected to fall as much as 20%. This figure excludes effects such as net marketing fund surpluses and deficits.

gernetzkyk@businesslive.co.za