MARKET WRAP: JSE muted as Covid-19 third wave weighs on sentiment

The JSE was little changed on Friday as a local third wave of Covid-19 infections continued to pose a threat, while global sentiment was lifted by the US infrastructure deal.

Covid-19 infections in SA continue to increase at an alarming rate, with Gauteng, the country’s economic hub, the worst affected amid reports of shortages of hospital beds and oxygen.

Calls for President Cyril Ramaphosa to implement stricter lockdown measures in Gauteng are growing louder, creating a dilemma for a provincial government that wants to avoid closing down the province’s economy.

“While I stated that market participants have priced in the third wave as a peripheral risk, it is becoming more concerning as calls for a stricter lockdown in Gauteng intensify,” said RMB’s Nema Ramkhelawan-Bhana. 

The JSE all share was little changed at 66,215.47 points and the top 40 was also flat. Industrial metals rose 1.36%, listed property 0.99%, banks 0.86%, resources 0.61%, and financials 0.41%. Precious metals fell 1.15%, industrials 0.8% and retailers 0.74%.

Despite a muted close on the day, the all share gained for the week, with industrial metals and banks gaining the most this week, up 6.65% and 1.48%, respectively.

Globally, sentiment was bolstered by US plans to push ahead with an infrastructure bill. The White House announced on Thursday it had struck a preliminary bipartisan deal for the infrastructure spend, boosting its chances of getting the bill  through Congress.

Biden said the deal would create millions of jobs while fulfilling a major part of his economic agenda. US markets cheered the news, closing at record highs overnight.

“The bipartisan US infrastructure agreement announced lifted stock markets that have lacked direction for most of this week. Biden’s infrastructure deal was agreed, paving the way for investment in roads, bridges and broadband,” said Oanda senior market analyst Jeffrey Halley.

“Although the deal was less ambitious than what Biden had hoped for, arguably, a massive investment in broadband would obviously benefit big-tech, but the package had something for everyone,” said Halley.

At 5.35pm, the Dow Jones Industrial Average was 0.65% firmer at 34,420.42 points. 

Earlier in Asia, the Shanghai Composite rose 1.15%, Hong Kong’s Hang Seng 1.43% and Japan’s Nikkei 225 0.66%.

The rand firmed along with its emerging-market currencies and at 5.51pm, had strengthened 0.7% to R14.10/$, 0.46% to R16.8388/€ and 0.91% to R19.5957/£. The euro was little changed at $1.1938.

Gold gained 0.25% to $1,779.10/oz and platinum 0.61% to $1,103.21/oz. Brent crude was 0.53% firmer at $75.96 a barrel.

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