Picture: JSE
Picture: JSE

The JSE was on track for its worst day in five months on Tuesday afternoon, tracking weaker global markets, with investors nervous about the potential economic effects of a coronavirus outbreak in China.

Reports of further deaths caused by the severe acute respiratory syndrome-like virus, and confirmation that it can be spread through human contact, sent a ripple of risk aversion through markets, with Asian and European markets all under pressure on the day.

This unfavourable development could not come at a more critical time with many people expected to travel within China before the Lunar new year, said FXTM senior market analyst Lukman Otunuga.

Authorities in China have confirmed that a new virus could be spread through human contact, reporting 15 medical staff had been infected and a fourth person had died.

There was other bad news as well. On Monday, Moody’s Investors Service downgraded Hong Kong's credit rating one notch to Aa3 from Aa2, changing its outlook from negative to stable. Hong Kong has faced months of protests.

Earlier, Shanghai Composite was down 1.41%, Hong Kong’s Hang Seng 2.81% and Japan’s Nikkei 225 0.91%.

In Europe, the FTSE 100 was down 1.27%, France’s CAC 40 1.19% and Germany's DAX 30 0.59%.

This week has also seen the International Monetary Fund (IMF) lower its growth forecasts for the SA economy in 2020 and 2021, citing structural constraints and deteriorating public finances.

The IMF cut its 2020 global growth forecast to 3.3% from 3.4% previously.

Importantly though, growth is still forecast to be stronger than the 2.9% recorded in 2019 with risks less skewed to the downside given preliminary signs that the slump in manufacturing and global trade is starting to bottom, National Australia Bank analyst Tapas Strickland said in a note.

At 12.12pm, JSE all share was down 1.96% to 57,695 points and the top 40 was 2.1% lower. Banks were down 0.8%, financials 0.91% and gold miners 2.67%.

Gold was down 0.31% to $1,555.96/oz and platinum 1.57% to $1,007.09/oz. Brent crude was down 1.2% to $64.34 a barrel.

tsobol@businesslive.co.za