MARKET WRAP: JSE firms for second session as global markets weather virus
The rand also firmed for a third consecutive session, as global markets mull mixed reports about medical research into the coronavirus
The JSE firmed for a second consecutive session on Wednesday, as global risk assets continued to recover from the effects of the coronavirus outbreak.
Global markets rallied on Wednesday following reports of a “significant breakthrough” by scientists at Imperial College, London. A separate media report out of China claimed that researchers had found two separate drugs that can inhibit the effect of the new strain of the coronavirus.
However, the World Health Organisation (WHO) played down these reports, saying, “There are no known effective therapeutics against this 2019-nCoV (coronavirus).”
Investors have fixated on the outbreak over the past two weeks, amid concerns it will damage global economic growth prospects. Nearly 500 deaths have been confirmed with most of these occurring in the virus epicentre, the city of Wuhan in China. The number of people infected has risen to more than 24,000 with 230 of these reported in 27 countries and regions outside mainland China.
Earlier, Reuters reported that Chinese authorities had pumped billions of dollars into the country’s economy to cushion the blow from the outbreak. They have also instituted stringent containment measures. These actions earlier boosted stocks in mainland China by more than 1%, as well as lifted shares in Hong Kong.
“It seems, the world may be nearing a cure for the coronavirus and that could mean markets may only need to price in one bad quarter of data for China,” said Oanda senior market analyst Edwad Moya.
“Financial markets may get overly optimistic on these early headlines [dismissed by the WHO], but the playbook remains that once Wall Street is beyond the virus, risky assets will remain supported on central bank stimulus and the global growth rebound story,” Moya said.
Earlier, Asian markets and their European counterparts were firmer. The Shanghai Composite was up 1.25%, Hong Kong’s Hang Seng 0.42% and Japan’s Nikkei 225 1.02%. The Dow was last seen up 0.95%, while in Europe, the FTSE 100 had gained 0.56%, France’s CAC 40 0.75%, and Germany’s DAX 30 1.18%.
The JSE all share strengthened 1.07% to 57,426.20 points, and has now gained 3.04% so far this week, and 0.63% this year. The top 40 gained 1.16%, industrials 0.96%, banks 1.84% and financials 1.39%. Platinum miners fell 1.22% and the gold index 1.26%.
The rand also firmed for a third consecutive session. At 6pm, it was flat at R14.7759/$, while gaining 0.31% to R16.2513/€ and 0.37% to R19.1738/£. The euro weakened 0.38% to $1.1002.
Gold gained 0.36% to $1,558.45/oz and platinum 1.67% to $978.03. Brent crude was up 3.63% to $55.75 a barrel.
Steinhoff International’s share price initially climbed by more than a quarter to a 10-month high on Wednesday morning, after its Pepco reported another quarter of double-digit revenue growth, even as the stock was boosted this week by reports that the business may soon be sold.
Pepco CEO Andy Bond said on Wednesday that the group expects to continue to to grow revenue for the rest of its financial year, and is planning further expansion, including its first Pepco store in Italy in April.
Steinhoff’s share price closed 1.89% higher at R1.62.