Shares continue their nosedive

The JSE plunged more than 8% on Monday after the SA government said that it could declare a state of emergency if the number of coronavirus cases escalates.

If SA’s growing outbreak of Covid19 is not swiftly contained, the government could impose a state of emergency, institute lockdowns and quarantine people away from their homes, health minister Zweli Mkhize warned on Monday.

On Sunday evening, President Cyril Ramaphosa declared a national state of disaster and announced sweeping measures to contain the spread of Covid-19. These included travel restrictions on foreigners from hardhit countries, a ban on gatherings of more than 100 people and the closure of schools.

The JSE all share plunged 8.32% to 40,500.23 points, the biggest drop since last Thursday, when it lost 9.72%. That fall was the largest since the October 1997 crash.

Banks slumped 9.06%, financials 10.9%, resources 7.3% and the industrial index 7.42%.

The platinum index plummeted 15.2% and property 14.07%.

Gold relinquished 1.57% to $1,505.66/oz and platinum 14.02% to $653.69. Brent crude was down 13.54% to $29.92 a barrel.

The sell-off also affected the bond market, pushing the generic 10-year yield, which moves inversely to the price, up 73 basis points to 10.71%, the highest since July 2008.

The rand was also under pressure and by 6.32pm, it had weakened 2.08% to R16.6192/$, 2.61% to R18.5304/€ and 2.22% to R20.3626/£. The euro was up 0.37% to $1.1148.

Global stocks also plunged, with investors bracing for more volatility as the pandemic hogs the headlines. Many countries have imposed travel bans and put some cities on lockdown to contain the spread.

The US Federal Reserve cut interest rates to close to zero on Sunday.

“As ever, officials have the extremely difficult job of striking the right balance in response to the coronavirus, between providing sufficient support and not creating mass hysteria,” said Oanda senior market analyst Craig Erlam.

“If more governments follow suit, the global economy may have a good chance of a strong recovery later in the year. The flip side … is that if the darkest hour is just before the dawn, then we may only currently be in late evening. A true test of investors’ risk tolerance is yet to come,” said Erlam.