Picture: REUTERS
Picture: REUTERS

The threat of the coronavirus outbreak may again weigh on the JSE on Friday, with Asian markets giving up some of their gains after China cut tariffs on US goods. 

The number of coronavirus cases has doubled over the past week, and there are clear signs it may have damaged China’s economic growth prospects in 2020.

There are about 288-million migrant workers in China, accounting for one-third of that country’s work force, and virus containment efforts likely mean a majority of those are unable to return to their workplaces, said National Australia Bank analyst Rodrigo Catril in a note.

According to Beijing’s transport authority, among the 10-million people who left the city ahead of the Lunar New Year holiday, 80% had not returned.

The coronavirus will have a larger negative effect on the global economy than the SARS outbreak in 2003, said IHS Markit analysts.

At the time of SARS, China was the sixth largest economy, accounting for only 4.2% of world GDP, but China is now the world’s second largest economy, accounting for 16.3% of world GDP.

In morning trade on Friday, Shanghai’s Composite was down 0.59%, while the Hang Seng had given back 0.77%. Tencent, of which Naspers is the largest shareholder, had inched up 0.17%.

Gold was flat at $1,556.29/oz while platinum had risen 0.14% to $963.89/oz. Brent crude was flat at $55.18 a barrel.

Markets have found some support this week from strong US economic data, as well as China’s cutting of tariffs on $75bn worth of US goods.

The coronavirus is likely to remain the dominant theme on the market on Friday, with little in terms of economic or corporate releases on the calendar.

Investors will also likely be eyeing US nonfarm payrolls numbers for January later. US private payroll processing company ADP’s gauge earlier this week surprised the market, however, showing employers added almost twice the number of new staff than expected in that month.

gernetzkyk@businesslive.co.za