MARKET WRAP: JSE drops as coronavirus fears persist

The JSE closed lower on Monday, tracking most global markets as risk sentiment waned amid concern about the spread of the coronavirus.

The World Health Organisation (WHO) has said that the small number of cases reported outside China could just be the “tip of the iceberg”, suggesting there could be widespread transmission in other countries, Reuters reported. The death toll had surpassed 900 on Monday, with more that 40,000 cases reported.

“Global infection rates and resumption of Chinese economic activity are unknowns and trade in both equities and FX is likely to be cautious as traders watch the coronavirus story with focus. Despite the flood of risk-off news equities remain virtually at all-time highs, but if the news does not improve soon investors may lose patience and the buy-the-dip mentality could finally give way,” said Boris Schlossberg, MD of forex strategy at BK Asset Management.

“If the virus peaks in mid- to late-February that should mean some emerging markets will thrive, the Treasury trade will keep the dollar stable and Europe will lag until we see the global re-acceleration story pick up in the second half of the year,” said Oanda market analyst Edward Moya.

Shortly after the JSE closed, the Dow was down 0.28% to 29,185.36 points. In Europe, the FTSE was down 0.37%, France’s CAC 40 0.35% and Germany’s DAX 0.20%. Earlier, the Shanghai Composite gained 0.51% while Hong Kong’s Hang fell 0.59% and Japan Nikkei 225 0.60%. 

FXTM senior research analyst Lukman Otunuga said the rand, which traded above R15/$ for a second consecutive session on Monday, could be set for “another rough and rocky week if the unemployment rate, retail sales and manufacturing production [data] paint a gloomy picture of the economy ahead of the budget speech”.

At 5.27pm, the rand had firmed 0.19% to R15.0351/$ and 0.30% to R16.4458/€ while it had weakened  0.23% to R19.4583/£. The euro was flat at $1.0937. 

The 2030 government bond was weaker with the yield rising one basis point to 8.89%. Bond yields move inversely to their prices.

Gold added 0.20% to $1,573.02/oz while platinum was down 0.26% to $961.75. Brent crude lost 1.43% to $53.66. 

The JSE all share fell 0.75% to 56,847.74  basis points and the top 40 0.76%. Resources fell 1.27% and gold miners 1.44%. 

Among diversified miners, Glencore fell 1.92% to R44.50, BHP Group 1.67% to R320.78 and Anglo American 0.78% to R392.79.

Intu Properties said on Monday that it is in talks with shareholders regarding a proposed equity raise. Its share price climbed 24.03% to R3.20.

Supply chain management and transportation company Super Group said on Monday that it is expecting its revenue to have decreased for the first time in 11 years, in the six months to end-December 2019. The group said it was partially as a result of  SA’s deteriorating economic growth and political uncertainties in Europe and the UK. Its share price fell 3.38% to R24.31.

mjoo@businesslive.co.za