Banks and golds lead JSE retreat

The JSE dropped in line with Asian markets on Thursday, with gold miners and banks leading losses, as fears about the effect of the coronavirus outbreak weighed on market sentiment.

The local bourse fell for the third day this week as investors fret about the outbreak, which had claimed more than 9,300 lives by Thursday and has brought the world’s economic hubs to a halt.

Locally, the Reserve Bank cut the repo rate by 100 basis points to 5.25% on Thursday amid a wave of global monetary policy easing as the spread of Covid-19 sparks concern about economic growth. The Bank of England cut interest rates to a record low of 0.1% on Thursday.

“The monetary easing has been coming thick and fast recently and, while I have no doubt that it’s making a huge difference and will continue to do so for the rest of the year, investors just haven’t been buying it,” said Oanda senior market analyst Craig Erlam.

“This is strange as we’ve spent a decade talking about how inflated markets have become as a result of such easing and now that we’re getting an extraordinary amount in a short period of time, it’s doing very little to stop the rot.”

At 5.48pm, the rand had weakened 0.41% to R17.24/$ and 2.09% to R20.2690/£, while it had firmed 1.37% to R18.5184/€. The euro had weakened 1.51% to $1.0746.

The R2030 government bond was weaker, with the yield rising 50 basis points to 11.86%. Bond yields move inversely to their prices.

Gold was down 0.32% to $1,481.29/oz and platinum 3.94% to $595.50. Brent crude added 7.78% to $27.27 a barrel.

Shortly after the JSE closed, the Dow was up 1.77% to 20,252.01 points. The FTSE 100 added 0.74%, France’s CAC 40 1.38% and Germany’s DAX 30 0.90%. Earlier, the Shanghai Composite fell 0.98%, Hong Kong’s Hang Seng 2.61% and Japan’s Nikkei 225 1.04%.

The JSE all share fell 1.66% to 37,963.01 points and the top 40 1.37%. Banks dropped 9.46% and gold miners 14.07%.

African Rainbow Capital said on Thursday that the intrinsic value of its portfolio rose 5.8% to R9.9bn in the six months to end-December. Its share price climbed 10.77% to R2.16.