The JSE fell nearly 2% at midday on Friday, leaving the all share index on course for its worst one-day decline since early September, after the discovery of the new Covid-19 variant sparked a flight from riskier assets.
The all share was down 1.75% to 69,317.91, as the top 40 index sank 1.60%. The gauge of banking and insurance stocks fell i between 5% and 6%.
However, the rand, which weakened to its lowest level in year against the dollar, softened the blow on the local share market. Big industrial shares in particular such as Prosus held up on the day, as did gold shares, which also benefited from a higher price because of its safe-haven status.
The rand changed hands to the dollar at R16.25/$, which was down 1.45% on the day.
Investors around the world were on edge regarding the new variant, which scientists have said has a high number of mutations and was suspected of driving the resurgent cases in Gauteng. It may well be present in other provinces, they said.
However, it remains unclear at this stage if the variant is resistant to existing Covid-19 vaccines, which until now have been touted as a last line of defence against the pandemic, which has had devastating health, social and economic consequences around the world.
Hospitality and leisure stocks slumped between 10% and 20% during the session, though they hardly move the needle in the overall market, which is weighted towards big mining and industrial stocks.
The big falls in banks mirrored anxiety about the potential effects on the economy and its domino effect on consumer and business spending. For insurance companies, the new variant will be particularly concerning given that they have already spent billions of rand worth of provisions to cover death and other claims.
In Europe, the UK’s FTSE 100 was down 2.76% and France’s CAC 3.31%, following a similarly poor session in Asia, where Hong’s Hang Seng lost 2.60% and Japan’s Nikkei 225 dropped 2.53%.
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