MARKET WRAP: JSE has worst day in eight months as virus fears hit global markets

27 January 2020 - 19:46
By Odwa Mjo

The JSE recorded its biggest one-day fall in more than six months on Monday, with global markets slumping as the death toll from the coronavirus increased, and amid concern that the outbreak may have an effect on the global economy.

China had to extend its Lunar New Year holiday which started last week as the death toll from the virus rose to 81, Reuters reported on Monday. After pausing public transportation in several cities last week, China has also banned its citizens from participating in overseas travel group tours in an effort to contain the virus.

“While I’m no fan of thinking about the economy and markets at times like this, it is clear that there are going to be knock-on effects,” said Oanda senior market analyst Craig Erlam. “Investors at the moment are responding to the little information they have and we’re seeing clear moves into the traditional safe havens but with the vast majority of cases still contained within China, there’s no panic yet.” 

Shortly after the JSE closed, the Dow was down 1.33% to 28,603.16 points. In Europe, the FTSE 100 had lost 2.26%, France’s CAC 2.59% and Germany’s DAX 2.52%.

Earlier, Japan’s Nikkei 225 fell 2.03% while Hong Kong’s Hang Seng and the Shanghai Composite were closed.

The outbreak has weighed on the rand which weakened by more than 1% on the day, making it the worst performing among emerging-market currencies. The rand is now down 4% so far this month.

“Another factor seen influencing the rand will be the Federal Reserve policy meeting on Wednesday. The central bank is widely expected to leave interest rates unchanged thanks to a robust US labour market, moderating inflation and positive economic data. However, if the Fed expresses optimism over the US economy, the dollar could appreciate, consequently pressuring the rand further,” FTXM senior market researcher Lukman Otunuga said.

At 5.37pm, the rand had weakened 1.25% to R14.6161/$, 1.07% to R16.1033/€ and 1.05% to R19.0915/£. The euro fell 0.13% to $1.1018.

Gold added 0.62% to $1,580.97/oz, while platinum lost 1.06% to $988.09. Brent crude rose 2.01% to $59.44 a barrel.

The JSE all share dropped 2.37% to 55,902.9 points, its biggest single-day drop since May 9 2019, at the height of the US-China trade war, while the top 40 fell 2.47%. Resources lost 2.59% and banks 1.97%.

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Woolworths said on Monday that its group sales increased by 3.8% in the 26 weeks ended December 29 compared with the 26 weeks ended December 23 2018. Its share price was down 3.15% to R46.15.

Pepkor said earlier that Moody’s Investors Service has assigned the retailer an rating, which is considered a low-risk credit rating. Pepkor’s share price fell 0.96% to R16.56.

Sasol said that it intends to have a secondary listing on A2X stock exchange from February. Its share fell 3.73% to R254.63.

Investec Property Fund announced its intention to sell its stake in two malls in SA. The company said it concluded two agreements for the disposal of its stake in Musina Mall in Limpopo and Boitekong Mall in the North West. Its share price was unchanged at R13.89.