MARKET WRAP: JSE has biggest weekly drop since August

The JSE concluded its worst week in 23 on Friday as fears that China’s coronavirus could turn into a pandemic hurt market sentiment.

The rand, however, had its first weekly gain in four, as emerging-market currencies recovered a little on Friday after Chinese authorities moved to contain the virus.

The local bourse dropped by almost 3% this week when global equities took a knock following the outbreak of the virus in China, which, by Friday, had claimed the lives of 26 people. Global markets recovered a little on Friday after the World Health Organisation (WHO) declared the virus as an emergency for China but not a global one.

“The coronavirus outbreak is intensifying, and Beijing is scrambling. Outrage is growing as local officials failed to address the contagion risks earlier. Concerns are growing that the travel bans in place will start to have a major impact on the economy with some saying it may have a one percentage point hit, or greater, on Chinese GDP,” Oanda senior market analyst Edward Moya said.

Shortly after the JSE closed, the Dow was up 0.17% to 29,210.06 points. In Europe, the FTSE 100 had added 1.34%, France’s CAC 40 1.02% and Germany’s DAX 30 1.53%. Earlier, Hong Kong’s Hang Seng rose 0.15% and Japan’s Nikkei 225 0.13%, while the Shanghai Composite was closed for the Chinese New Year. 

The rand managed to dodge much of the global risk-off environment, ending the week 0.26% firmer against the dollar.

“Weak levels of economic demand and high real interest rates continue to support the rand fundamentally, assisting in compressing nominal yields but also to reduce the depreciation potential in the rand,” Mercato Financial Services analyst Nico du Plessis said.  

At 5.17pm, the rand had weakened 0.2% to R14.4172/$ while it was flat at R15.9001/€ and R18.877/£. The euro had fallen 0.27% to $1.1029.

Gold added 0.33% to $1,567.72/oz and platinum 1.1% to $1,014.85. Brent crude dropped 1.55% to $61.14 a barrel. 

The JSE all share rose 0.64% to 57,261 points and the top 40 0.72%. Industrials gained 1.02% while platinum miners fell 2.01%. 

Pepkor, which owns Ackermans, HiFi Corp and Shoe City, said revenue from continuing operations rose by 7.6% to R20.9bn in the three months to end-December. Sales for Pep and Ackermans stores grew by 6.4%, and like-for-like sales by 3.2%. The retailer said that while the current macro-economic and employment landscape is not expected to improve in the near future, the group remains optimistic. Its share price rose 0.97% to R16.72.

Pan African Resources said on Friday that it is on track to meet its full-year guidance of 185,000oz. The gold miner said group sales increased by 14% to 92,941oz in the six months to end-December. Its share price fell 2.22% to R2.20.

Earlier in the day, Sasol said that the damage from the explosion earlier in January at its Lake Charles facility in the US seemed to be limited to a small portion of the low-density polyethylene unit. The company’s share price gained 1.73% to R264.50.

mjoo@businesslive.co.za