The JSE tracked weaker global markets on Monday, with rising Covid-19 cases in Europe prompting concern about the global economic recovery.
European shares fell the most as a rising number of Covid-19 cases prompted renewed lockdown measures, with investors concerned that another economic standstill would significantly delay the recovery and hurt consumer and business confidence.
Top government scientists in the UK said the country has 6,000 new cases a day, doubling every seven days. If the virus continues to spread at this rate, that would lead to more than 200 deaths per day by November. The World Health Organisation (WHO) warned that the latest data should serve as a “wake-up call for all of us”.
“Equity markets ended off Monday on the back foot. Investors are worried about the momentum in the economic recovery given the resurgent numbers of global Covid-19 cases. Given that the list of uncertainties is growing, especially on the pandemic front, risk is now skewed to the downside,” said FXTM chief market strategist Hussein Sayed.
“We have US elections just around the corner, and high stakes of possible national lockdowns in the UK and elsewhere all pointing to waning momentum in the economic recovery. All these factors indicate more volatile times for the next several weeks,” said Sayed.
The JSE all share lost 2.48% to 53,319.08 points and the top 40 2.47%. Platinum miners dropped 3.43%, banks 3.11%, financials 3.02%, resources 2.72%, the gold mining index 2.46% and industrials 2.1%.
In Europe, the FTSE 100 dropped 3.42%, Germany’s DAX 30 4.37% and France’s CAC 40 3.74%.
The Dow Jones Industrial Average was last seen down 2.9% at 26,855.13 points.
Earlier, the Shanghai Composite lost 0.63% and Hong Kong’s Hang Seng 2.06%, while Japan’s Nikkei 225 gained 0.18%.
Gold dropped 3.08% to $1,893.66/oz, its biggest one-day loss in a month. Platinum plunged 6.39% to $866.82/oz, its biggest one-day drop since March. Brent crude was down 4.32% to $41.2 a barrel, losing the most in two weeks.
“Surging coronavirus cases and doubts over the next round of US fiscal support is triggering a wide range risk-averse tone that is sending the dollar higher and sinking gold,” said Oanda senior market analyst Edward Moya.
“Oil prices are sinking as Europe seems poised for coronavirus induced lockdowns and after Libya has restarted oil production. A strong dollar and mounting risks to the global economic recovery will continue to put pressure on prices,” said Moya.
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