JOHANNESBURG - South African stocks launched a slight recovery on Friday as oil price bounced back following a massive sell-off of most assets in a move into cash and liquid assets as panic grew over the impact of the coronavirus (Covid-19) and US travel ban.
Brent crude rose more than 6 percent on Friday to $35.13 per barrel, helping the battered Sasol, which faced a week of turmoil that saw it surrendering more than 80 percent of its market value.
UK and US markets also rebounded after plunging on Thursday as cautious investors digested a European Union travel ban imposed by the US President Donald Trump..
FXTM’s Lukman Otunuga said Trump’s travel ban on 26 European countries added more volatility to an already unsettled market, leaving global stocks ablaze.
Otunuga said the market was also not helped by ongoing fears on the escalation of the coronavirus outbreak.
He said the volatility was set to continue burning the outlook for the global economy.
“Markets currently remain in panic mode with risk aversion the dominant theme,” he said.
“Equities across the globe are likely to remain severely depressed amid the darkening mood, with safe-haven assets like the Dollar and Japanese Yen, the best destinations for safety.”
The JSE tumbled on Thursday as the coronavirus pandemic continued to dampen investor sentiment.
The local bourse was pulled down by broad-based losses in platinum, gold, retail and banking sector stocks.
The JSE All Share Index plunged the most in more than 20 years on Thursday, losing nearly 10 percent in a single day while the Top40 Index was also 9.2 percent lower.
On Friday, the South Africa’s main stocks recovered 0.11 percent to 44 351 points while the Top40 was 0.25 percent higher to 39 634. Gold recovered 0.60 percent to $1 587 while platinum firmed 4.11 percent to $797.
Retailers were still 0.25 percent down, banking firms were 1.58 percent lower while miners recovered 2.16 percent to 30 847 points.
The rand, which also faced a torrid week amid the global rout and Eskom intensified load-shedding to stage 4 recovered slightly to exchange hands at RXXX against the greenback by 5pm on Friday despite weakening against almost every single G10 currency this week.
International central banks have since convened emergency meetings to provide liquidity to support financial markets, a move that restored confidence back onto the markets.
ActivTrades’ analyst Pierre Veyret said the decision from Spanish and Italian regulators to ban short-selling on certain stocks also boosted the bullish opening on EU shares.
“Share markets are rebounding slightly on Friday in an attempt of a price stabilization following the worst sell-off since the 1987 crisis,” Veyret said.
“However, the uncertainty persists on risky assets as coronavirus cases and the associated death toll continues to soar. Markets are now entering an irrational-like state with prices heading for their worst week since 2008.”