South Africa

MARKET WRAP: JSE and rand fall as global market rally stumbles

The JSE and the rand fell after the recent global market rally stumbled as new coronavirus restrictions dented investor optimism about US President Joe Biden’s plans to increase fiscal stimulus measures in the world’s biggest economy.

The rand traded back above R15/$ after Hong Kong imposed its first lockdown to combat Covid-19 a day after mainland China said it would impose strict testing on travelers during its Lunar New Year celebrations amid an increase in infections.

Germany, which, this week, extended its lockdown to mid-February, said a vaccine shortage would last for six to eight weeks as virus deaths in the country passed the 50,000 mark.

“Once again, it’s the pandemic that is slowing markets down. The sluggish progress of the vaccination campaign in Europe is causing frustration and concern,” said Milan Cutkovic, market analyst at Axi. “The longer the restrictions remain in place, the more investors will question whether the governments and central banks are doing enough to prevent another, potentially longer-lasting recession.”

The JSE all share fell 0.3% to 63,987 points and the top 40 0.1%, even as Naspers, which accounts for about 21% of the measure’s value, gained 1.8% to a record high R3,564 and Prosus, its international internet arm, jumped 3.3% also to a record R1,810.

At 5.44pm, the rand was 0.7% weaker against the dollar at R15.05/$, 0.9% down at R18.32/€, and 0.3% softer to R20.56/£. The dollar strengthened against the pound but was little changed against the euro as Biden prepared to sign two executive orders that would expand benefits for Americans affected by the pandemic.

Biden’s main aim is to provide almost $2-trillion in additional Covid-19 relief, which would include $1,400 payments directly to Americans.

The S&P 500 fell 0.5% to 3,834 points in early New York trade. Gold fell 1% to $1,851/oz, while platinum dropped 2.1% to $1,101/oz. Brent crude fell 0.9% to $55.57 a barrel.

“Stock markets are ending the week on a negative note after a period of consolidation so far this month,” said Craig Erlam, senior market analyst, Oanda . “It's been a strange start to the year following a bumper two months, with vaccine optimism keeping sentiment upbeat despite the growing near-term Covid-19 risks.”

The R2030 government bond firmed, with the yield slipping four basis points to 8.78%. Bond yields move inversely to their prices.

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