JSE faces pressure on Monday as coronavirus cases spike

The JSE faces a day of pressure on Monday morning, with Asian markets selling off sharply due to a sharp rise in coronavirus cases in South Korea and Italy.

France has warned that the viral outbreak is hurting its tourism industry, while Italy is cancelling football matches and imposing quarantine measures amid an outbreak.

Of concern is that cases are showing up in people with no connection with China, AxiCorp chief Asian markets strategist Stephen Innes said in a note.

This suggests “things are about to get extremely problematic, and market conditions could get exponentially worse this week”.

SA markets face a crucial test on Wednesday when finance minister Tito Mboweni will deliver the budget speech, something that may determine SA’s economic future, as well as the status of the last remaining investment grade credit rating from Moody’s Investors Service.

In morning trade on Monday the Hang Seng fell almost 1.5% while the Shanghai composite was down 0.34%. The South Korean Kospi index fell 3% at one point.

Tencent, of which Naspers is the largest single shareholder, was down more than 2% in Hong Kong.

Gold rose 1.08% to $1,660.94 an ounce while platinum slipped 0.29% to $967.15. Brent crude slumped 2.41% to $57.04 a barrel.

The rand weakened 0.46% to $15.06 a dollar.

It’s a quiet day from a data perspective, while renewed risk aversion is likely to cause emerging markets to come under pressure, Peregrine Treasury Solutions treasury partner Bianca Botes said in a note.

The budget speech and coronavirus is likely to hog the headlines this week.

On Monday chemical group Sasol is expected to release its half-year results, and it is likely to give an update on cost overruns at its embattled Lake Charles Project in the US. The company also faced an explosion at that facility in January.

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