JSE may track Asian market recovery on Monday

The JSE could take its lead from a mild recovery in Asian markets on Monday morning, after stocks were pummeled by the fear of the coronavirus outbreak last week.

A Chinese purchasing managers index (PMI) for February has fallen to its lowest level on record, though stock markets in that country were up, with investors now eyeing stimulus from global central banks.

Markets had fully priced in a rate cut by the US Federal Reserve at its March meeting, said National Australia Bank analyst Tapas Strickland in a note.

Data continues to take a back seat, being seen as dated, he said.

The Chinese data had also shown a lift in business sentiment, showing there was hope in that country that production would improve as people return to work, said AxiCorp chief market strategist Stephen Innes in a note.

The World Health Organisation (WHO) has stopped short of calling the outbreak a pandemic, but new countries continue to report cases of the virus, which has already led to the cancellation of sporting events and disruption to global supply chains.

In morning trade on Monday, the Shanghai Composite was up 2.94% while Japan’s Nikkei had added 1.21% and the Hang Seng 0.92%.

Tencent, which influences the JSE via major shareholder Naspers, was up 1.35%.

Gold had risen 0.93% to $1,600.81/oz while platinum had gained 2.18% to $881.27. Brent crude was up 2.4% to $51.30 a barrel.

The rand was 0.19% firmer at R15.63/$.

Focus this week is likely to remain on the coronavirus, though SA’s GDP numbers for the fourth quarter of 2019 are due on Tuesday. The consensus is for a 0.2% contraction in the fourth quarter, meaning SA fell into a recession in the second half of 2019.

In corporate news, Bidvest is expected to report later in the day that basic earnings per share fell as much as 28% in its six months to end-December, largely due to accounting changes.

JSE-listed technology group Alviva is expected to report an up to 46% fall in headline earnings in its half year to end-December. The company said in a recent trading update that it had faced tough economic conditions in SA, minor losses on foreign exchange and operating challenges.

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