JSE drops amid Covid-19 surge

The JSE recorded a second day of losses on Thursday while global equities were mixed as a rise in coronavirus cases has sparked fear that the global economic recovery could take longer than initially thought.

“Recent spikes in Covid-19 cases in several US states and across the globe are putting the reopening of economies into question. Whether we’re seeing a second wave or just a continuation of the first wave, the outbreak may reverse actions taken by governments to reopen their economies, hence curbing hopes of a smooth recovery,” said FXTM chief market strategist Hussein Sayed.

More than 9.5-million cases have been confirmed worldwide, with just more than half now recovered. Of the total cases, 2.4-million were recorded in the US.

“As if Covid-19 wasn’t bad enough, there are now concerns that the Trump administration might open a new front in the trade war, as they are considering new tariffs on European goods,” said AxiCorp market analyst Milan Cutkovic.

“Uncertainties surrounding the pandemic and a possible return of the trade conflict is a dangerous combination for stock markets. Investors should be prepared for major mood and price swings.”

Despite reaching three-week lows earlier on Thursday after a worsethan-expected supplementary budget, at 6.20pm, the rand had firmed 1.19% to R17.1974/$, 1.31% to R19.3066/€ and 1.13% to R21.3652/£.

The euro had weakened 0.23% to $1.1226.

Shortly after the JSE closed, the Dow was up 0.21% to 25,498.2 points after US jobless claims eased to 1.4million in the week ended June 20.

In Europe, the FTSE 100 added 0.38%, France’s CAC 40 0.97% and Germany’s DAX 30 0.69%. Earlier, the Shanghai Composite was up 0.3% while Hong Kong’s Hang Seng fell 0.50% and Japan’s Nikkei 225 1.22%.

The JSE all share fell 0.98% to 53,914.05 points and the top 40 0.92%. Food and drug retailers fell 2.37% and industrials 1.81%.

The yield on the R2030 government bond fell earlier on Thursday, but closed flat at 9.17%. Bond yields move inversely to their prices.

“The local bond market grabbed at the small slivers of positive news in the budget speech by finance minister Tito Mboweni with some enthusiasm,” said Rand Merchant Bank analyst Deon Kohlmeyer.

Gold was little changed at $1,760.88/oz while platinum was down 0.35% to $796.11. Brent crude lost 0.32% to $40.40 a barrel.