The JSE started the week on the back foot as traders and investors returned from the Workers' Day long weekend to news of renewed trade tensions between the US and China, which sent Wall Street lower on Friday. US President Donald Trump threatened to impose new tariffs on China in retaliation for the coronavirus crisis.

Financial and resources stocks were worst hit, with gold producers benefitting as the gold price moved back above $1,700 an ounce. Sasol was one of the big losers, dipping 6.2% after last week's brief recovery for the embattled oil and chemicals group.

Although Sasol has hedged a large portion of its production until the end of June, Ingham Analytics says this isn't enough to boost earnings and it has adjusted EPS estimates down again. It previously cautioned on Sasol's guidance on profits from the Lake Charles Chemicals Project in the US and now questions why the project will make such a large loss for the year, particularly as it should have a feedstock pricing advantage. There are other concerns too around the balance sheet. Is a rights issue doable? Do you buy or sell the stock? Get some answers in Ingham Analytics' latest note on Sasol, "A raw state".

In today's newsletter, after five weeks of almost no sales Famous Brands is starting home deliveries but says it doesn't know how viable they will be and Phumelela has warned that it faces possible liquidation if it can't raise capital while the horse racing industry remains in lockdown.

Meanwhile, the property industry is continuing to take measures to guard against the impact of Covid-19. Redefine Properties is holding back on an interim dividend for now and Equites Property Fund has withdrawn from a deal to build a new mega warehouse for Pepkor.

Good news for Imperial Logistics though: it has sold its European shipping businesses as it focuses on African trade and logistics routes. Its shares responded positively yesterday.

Have a good day and stay safe.

Stephen Gunnion

Managing Editor, InceConnect

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