South African stocks kicked off Monday on the back foot, hitting their lowest in more than three months as rising Covid-19 infection rates in Europe kept risk assets under pressure, while the rand weakened 3%.
The Johannesburg All-share index hit a session low of 53,067 points earlier, a level last hit on June 17 before paring loses to trade 2.04% weaker to 53,559 points at 1345 GMT. The Top 40 index fell 2.04% to 49,370 points. Investors looked past easing lockdown regulations at home and dropped risky assets, a trend seen in equities globally on Monday.
“Investors are becoming increasingly worried about the momentum in the economic recovery given the resurgent numbers of global Covid-19 cases and lack of progress on a new US stimulus package,” Hussein Sayed, Chief Market Strategist at FXTM said in a note
Given that the list of uncertainties is growing, especially on the pandemic front, risk is now skewed to the downside
European countries including Denmark, Greece and Spain have introduced new restrictions on activity.
Among the decliners were mobile operator MTN Group down 4.74% and chemicals and energy company Sasol down 3.25% as oil prices fell. Other sectors included banks down 1.49%, general retailers down 2.93% and commodity stocks down 1.99%.
In the currency market, the rand moved off the six-month best mark of R16.09 it had hit after the local central bank decided on Thursday to keep lending rates unchanged after an easing cycle involving 300 basis points of cuts.
A global emerging currency selloff on Monday meant that the rand weakened 3% to R16.71 per dollar by 1343 GMT compared to a close of R16.33 on Friday in New York. “Today’s move shows how our domestic currency remains at mercy of sudden bouts of global market volatility, despite the suggestion that the rand may be undervalued on a longer term basis,” IG senior market analyst Shaun Murison said.