MARKET WRAP: JSE gains even though global investors remain risk averse
The JSE bucked the international trend to close firmer on Thursday, with global markets remaining under pressure as the death toll from the coronavirus in China rises amid mounting concern about its economic implications.
Asian stocks tumbled as economists reconsidered growth prospects in the the first quarter for the second biggest economy in the world. Already, millions of Chinese are facing travel restrictions, limiting economic activity.
One Chinese government economist said the crisis could cut first-quarter growth by as much as one percentage point, to 5% or lower, with the crisis hitting sectors from mining to luxury goods, reported Reuters.
With more than 7,000 confirmed cases so far and a death toll of at least 170, the World Health Organisation (WHO) is expected to hold an emergency meeting on Thursday to consider its next steps in containing the virus. Markets will be closely watching the outcome of the meeting.
“Asian markets have fallen to seven-week lows, as concerns over the coronavirus elevate once again,” said RMB analyst Siobhan Redford. “Should the WHO issue a global alert over the virus as the death toll continues to rise sharply, the risk-off environment that has been dominating global trade is likely to intensify.”
Earlier, Hong Kong’s Hang Seng fell 2.62% and the Nikkei 225 1.72%. Soon after the JSE’s close, in Europe the FTSE 100 was down 1.45%, France’s CAC 40 1.53% and Germany’s DAX 30 1.3%.
The Bank of England kept interest rates steady following governor Mark Carney’s final monetary policy meeting on Thursday. The decision comes at a crucial time for the British economy, with the UK set to leave the EU at 11pm London time on Friday. British and EU leaders will now enter pivotal negotiations in a bid to secure free-trade agreements before the end of 2020, reported CNBC. The pound rose following the rate announcement.
Unlike the JSE, the rand came under intense pressure, along with other emerging-market currencies, as global investors rushed to safe havens. At 5.44pm, it had weakened 1.2% to R14.7905/$, 1.43% to R16.3196/€ and 1.82% to R19.3707/£. The euro had strengthened 0.23% to $1.1035.
The JSE all share gained 0.39% to 56,590.9 points and the top 40 0.42%. Banks were up 0.27%, financials 0.37%, platinum miners 3.49% and the gold index 4.54%.
Gold added 0.48% to $1,584.37/oz, while platinum dipped 0.17% to $974.50. Brent crude fell 1.63% to $58.59 a barrel.
Data from Stats SA showed earlier that producer price inflation (PPI) rose in December, matching market forecasts, driven in part by changes in the fuel price. PPI increased an annual 3.4%, coming off the low it reached in November, when it plumbed 2012 levels.
For 2019, however, factory gate prices averaged their lowest levels in four years. The slowdown came as demand in SA’s economy remained weak on poor growth expectations and consumers battling economically.
Technology group EOH, which saw its share price plummet almost 95% since the beginning of 2017, said on Thursday that it has made progress in cutting costs in its six months to end-January as it seeks to balance its books in the wake of a corporate governance scandal. Shares in the company, which expects to release its interim results on April 7, were down 1.81% to R8.69. It has fallen 30.81% so far in January.