The JSE tracked weaker global markets on Thursday as Europe grapples with a surge in Covid-19 cases, while a dire economic outlook from the US Federal Reserve also weighed on sentiment.
France reported its biggest increase in new coronavirus cases since early May, before the country emerged from an almost two-month lockdown. Meanwhile, Spain has re-emerged as the epicentre of the coronavirus pandemic in Europe after recording the highest number of daily infections on the continent this week.
The Fed expressed concern about the coronavirus’s continuing effect on the economy in meeting minutes released on Wednesday, highlighting doubts about the speed of the recovery of the world’s largest economy.
“Stock markets in the red across the board on Thursday, as sentiment weakens on the back of the Fed minutes. The minutes reminded investors that the economy is still not in good shape. The surge in Covid-19 infections has muted the recovery and anyone still believing in a V-shaped recovery needs to do some reassessment,” said FXTM chief market strategist Hussein Sayed.
“However, this was not the only reason why investors turned defensive. The fact that the Fed appeared reluctant to step up further stimulus efforts imminently, disappointed the bulls who were expecting further clues on the trajectory of monetary policy,” said Sayed.
The JSE all share lost the most in nearly two weeks, down 1.42% to 55,629.98 points and the top 40 1.45%. Platinum miners dropped 5.05%, banks 2.04%, financials 1.95%, resources 1.84% and the gold index 0.17%.
In Europe, the FTSE 100 fell 1.61%, Paris’s CAC 40 1.33% and the Frankfurt DAX 30 1.14%.
Earlier, the Shanghai Composite fell 1.3%, Hong Kong’s Hang Seng 1.54% and Japan’s Nikkei 1%.
The rand weakened along with its emerging-market peers, reaching an intraday worst of R17.35/$. At 6.31pm, it had fallen 0.27% to R17.2885/$, 0.3% to R20.4991/€ and 1.06% to R22.8219/£. The euro had strengthened 0.12% to $1.1854.
“The rand continues to lag behind the recovery in the other commodity currencies, dragged down by its rising risk profile as further credit rating downgrades loom for SA, while the federal open market committee minutes weakened emerging-market currencies today,” said Investec chief economist Annabel Bishop.
Gold added 0.89% to $1,945.42/oz, while platinum dropped 2.04% to $913.75. Brent crude was down 0.93% to $44.74 a barrel.
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