JSE could feel coronavirus pressure ahead of budget on Wednesday
All eyes are on the budget speech at 2pm, while Asian markets are still showing symptoms from the coronavirus outbreak
The JSE could take its lead from mostly weaker Asian markets on Wednesday morning, though the budget speech at 2pm is likely to steal most of the focus.
The budget will be closely watched as SA clings to its last remaining investment-grade credit rating from Moody’s Investors Service. The size of the budget deficit and the extent of the government’s support for fiscally draining state-owned enterprises (SOEs) is threatening a rise in the cost of SA debt.
Globally, the spread of the coronavirus has prompted concern, with Iran and Italy both reporting a rapid rise in cases. Germany and Switzerland are also reporting cases, while there are concerns that the virus will also spread in the US.
Markets are selling off because investors realise that the more widespread the virus, the longer it will take for economic activity to return to normal, said BK Asset Management MD for foreign exchange strategy Kathy Lien in a note.
In morning trade on Wednesday, the Shanghai Composite was up 0.3%, while Japan’s Nikkei had fallen 0.82% and the Hang Seng 0.57%.
Tencent, which influences the JSE via Naspers, had fallen 0.5%.
Precious metal prices were higher, however, and a weaker rand could also boost local miners.
Gold was up 0.33% to $1,6936.86/oz while platinum had risen 0.77% to $931.30. Brent crude was up 0.44% to $55.44 a barrel.
The rand was little changed at R15.22/$, having fallen 8.85% against the dollar so far in 2020.
Locally, airline group Comair is expected to release its results for the six months to end-December later in the day, having warned of rising maintenance costs, while also saying it may not receive money from a settlement with SAA over anticompetitive conduct.