JSE Index Drops as US-Iran Tensions and Gold Stocks Drag Market Lower
During the early European trading session, the JSE FTSE All Share Index failed to stop its previous session losses and is still...
Quick overview
- The JSE FTSE All Share Index continues to show losses, trading at 110,003.37 with a 0.32 percent decline in the last 24 hours.
- The bearish trend is attributed to escalating US-Iran tensions, which increase global market uncertainty and push investors towards safe-haven assets.
- Weak performance from major gold mining companies is also contributing to the downward pressure on the JSE index.
- Traders are closely monitoring the upcoming US Consumer Price Index report and Fed Chair Kevin Warsh's testimony for insights on future interest rates.
During the early European trading session, the JSE FTSE All Share Index failed to stop its previous session losses and is still showing losses. At the time we are writing this article, the index is trading at 110,003.37 and showing 0.32 percent losses in the last 24 hours. However, the reason for its bearish trend can be linked to the escalating conflict between the US and Iran.
This was seen as bearish for the JSE as it increases uncertainty in the global market, which, in turn, pushes investors to move their money into safe haven assets like the US dollar and reduces demand for emerging market stocks like the JSE.
Moreover, the increasing chances of a Fed rate hike were seen as another key factor that is having bearish impact on JSE index.
Although the gains in the US dollar could be limited as traders seems cautious to place any strong positions ahead of the US CPI report and Fed Chair Warsh’s testimony.
Looking forward, traders are keeping their eyes on the US Consumer Price Index (CPI) report for June, which is scheduled to be released on the day. Economists expect overall inflation to decrease from 4.2 percent in May.
People will pay close attention to core inflation, which was 2.9 percent in May. Afterward, new Fed Chair Kevin Warsh speech will be in the spotlight as he will speak to Congress for the first time. Hence, traders will watch his words for some fresh clues about future interest rates.
US-Iran Tensions Put Pressure on the JSE
In the meantime, the closure of the Strait of Hormuz and escalating US-Iran tensions weighed on the JSE as rising crude oil prices reignited inflation fears and increased expectations that US interest rates could stay higher for longer. The US military launched a third straight night of strikes against Iran on Monday after US President Donald Trump reimposed a naval blockade of Iranian ports.
On the other side, Iran’s Islamic Revolutionary Guard Corps (IRGC) also targeted US facilities in the region. As a result, traders started moving thier money toward safe-haven assets, putting pressure on emerging market stocks such as the JSE.
Gold Mining Stocks Put Pressure on JSE
Another important factor that is putting pressure on the JSE index is the weak performance of the major gold mining companies. These big mining stocks play a very major role in the JSE because they are among the largest companies listed there.
On Tuesday, July 14, Harmony Gold Mining shares were trading around 24,800 South African rand. The stock was showing small losses during the day. Gold Fields was trading near 55,494 rand and was also moving slightly lower. In the US market, AngloGold Ashanti was trading around 80 US dollars.
Despite gold prices is strong internationally, these three big gold mining companies were not performing well. Hence, the downward movement in these shares created enough selling pressure to push the overall JSE index lower.
- Check out our free forex signals
- Follow the top economic events on FX Leaders economic calendar
- Trade better, discover more Forex Trading Strategies
- Open a FREE Trading Account
- Read our latest reviews on: Avatrade, Exness, HFM and XM
Related Articles
Sidebar rates
Related Posts
SaveAva
