JSE may recover a little after Monday’s crash
The JSE could be in store for a mild recovery on Tuesday morning, after some Asian markets firmed a little on hopes that global stimulus efforts will ultimately result in an economic rebound.
Global stocks remain under severe pressure and volatility is high. More countries are restricting the movement of their citizens to contain the coronavirus, with SA schools to be closed from Wednesday.
The US has slashed interest rates close to zero, but analysts warned monetary stimulus will do little to alleviate the effects of factory closures or shoppers staying at home.
US markets had their third-worst day in history on Monday, amid increasing restrictions in that country and after a warning from US President Donald Trump that the effects of the coronavirus could persist until August and cause a recession.
This is not a banking crisis, but a global economic crisis where virtually every industry is facing extreme pressure, said AxiCorp chief Asia markets strategist Stephen Innes in a note. Unfortunately, if you shut an economy down, low rates do not have a stimulative effect on consumption until the shock passes, he said.
“Many traders are buying into the thesis that China will unleash the mother of all stimulus once China sees the virus through and people return to work,” said Innes.
In morning trade, Asian markets were mixed, with the Hang Seng up 1.05%, while the Shanghai Composite was flat.
Tencent, which influences the JSE via Naspers, was up 3.35%.
Gold fell 0.79% to $1,502.08/oz, while platinum firmed 2.75% to $679.10, though the precious metal is still down more than 22% over the past week.
Brent rose 2.95% to $30.70 a barrel. The rand firmed 0.63% to R16.56/$.
There is little on the local corporate and economic calendar, and news flow, including from companies, is likely to focus almost entirely on the coronavirus pandemic.
Source: businesslive.co.za