News in South Africa 19th March:
1. Emerging markets under fire:
The rand was trading at R17.45/$ early on Thursday morning as emerging market currencies came under fire.
It has now weakened 10% so far this month against the dollar, and crashed through the previous record closing level of R16.8717/$ on 18 January 2016. But it is still some way from its weakest every intraday trading level – R17.9169/$.
Coronavirus fears triggered extreme market volatility and investors embraced the perceived safety of the American dollar.
“A growing sense of unease over how badly the pandemic will hit the global economy is fuelling explosive levels of risk aversion, hitting appetite for riskier assets including emergency-market currencies,” says Lukman Otunuga, senior research analyst at FXTM.
The pound hit its lowest level against the dollar in 35 years, while the Aussie dollar fell to its lowest level in 17 years.
2. Banking stocks also under fire:
Capitec lost R36 billion in a single day yesterday as banking stocks came under fire on the JSE. The JSE lost more than 7% yesterday.
Wall Street stocks plunged again Wednesday as the economic toll from the coronavirus mounts and analysts warn of a deep recession.
The Dow Jones Industrial Average tumbled 6.3 percent, or more than 1,300 points, to close the day at 19,898.92, its first close below 20,000 since 2017.
The broad-based S&P 500 dropped 5.2 percent to finish at 2,398.10, while the tech-rich Nasdaq Composite Index tumbled 4.7 percent to 6,989.84.
The Dow fell as much as 10 percent during the early afternoon, but stocks rallied somewhat near the end of the session as the US Senate passed a $100 billion emergency package for free coronavirus testing, sick pay and other benefits related to the crisis.
Economists are slashing their forecasts as more sectors shut down. A note from JPMorgan Chase projected US activity would shrink 14 percent in the second quarter, while Europe’s output would plunge 22 percent.
3. Bars under new state rules:
As part of the Disaster Management Act, government has just introduced strict new measures to contain the spread of the coronavirus.
On Sunday, president Cyril Ramaphosa declared a national state of disaster.
With immediate effect, all establishments – including bars, clubs, shebeens and restaurants – that sell liquor must close at 18:00 on weekdays and Saturdays, and at 13:00 on Sundays and public holidays.
The establishments may only open at 09:00 the next morning.
The same regulations apply to all liquor stores.
All on-consumption premises selling liquor, including taverns, restaurants and clubs, are not allowed to have more than 50 people at the same time – or must be closed with immediate effect.
4. Oil prices on the rebound:
Oil prices rebounded strongly Thursday a day after US crude hit its lowest level for 18 years, as the European Central Bank launched a bond-buying scheme to combat the coronavirus pandemic.
US benchmark West Texas Intermediate was up almost 17 percent at nearly $24 a barrel, a day after plunging 24 percent.
International benchmark Brent crude was up 8.5 percent at $27 a barrel, a day after slumping 14 percent.
Oil markets have been hammered due to collapsing demand as the virus prompts sweeping travel restrictions and business closures, and as major producers Saudi Arabia and Russia engage in a price war.
Thursday’s jump came as investors bought the commodity at bargain prices, and followed the ECB’s surprise announcement of a 750-billion-euro scheme to purchase government and corporate bonds.
5. SAA scraps flights:
National carrier South African Airways is scaling down its capacity, as coronavirus wreaks havoc on the global transport industry.
The airline is cancelling 162 flights between 17 March and 31 March 2020. Of these 38 are international and 124 are regional, it said.
“The effects of the outbreak of the coronavirus (Covid-19) have led to travel disruptions and restrictions across the world, leading to the grounding of aircraft, releasing employees, and cancelling flights for many airlines. SAA is not immune to these realities,” the airline said.
SAA has had to review its flight schedule and will only operate flights under circumstances where its load factors and other business considerations “weigh in favour” of scheduling flights, it said.