November 13, 2019 / 5:42 PM / 2 months ago

UPDATE 1-South African rand edges firmer, stocks dip

(Adds latest prices, analyst quote)

JOHANNESBURG, Nov 13 (Reuters) - South Africa’s rand ended firmer on Wednesday, boosted by signs the Federal Reserve would keep U.S. interest rates steady in the near future.

At 1650 GMT the rand was 0.2% firmer at 14.9200 per dollar compared to an opening level of 14.9290.

The rand has been aided by three U.S. rate cuts this year, which have boosted attractiveness of the returns it offers. A lower return on U.S. rate-linked assets often pushes investors to buy higher-yielding emerging market currencies.

On Wednesday Fed chief Jerome Powell offered an optimistic outlook for the economy, solidifying the case for the central bank to hold off on cutting or raising rates this year.

But the lower probability of the Fed further cutting rates next year, which has dropped to around 30%, prompted traders to warn the rand’s advance would be short-lived, especially in light of growing concern around economic growth. Retail sales rose 0.2% year-on-year in September following a revised 1% increase in August, data from Statistics South Africa showed on Wednesday, another sign Africa’s most industrialised economy will struggle to top the 1% mark this year.

“These figures are consistent with other indicators of real economic activity which continue to show that domestic underlying economic conditions remain poor,” Nedbank economists Isaac Matshego and Dennis Dykes said in a note.

A strike over possible job cuts planned for Friday by a majority of South African Airways (SAA) employees is also set to hurt sentiment toward the rand.

Bonds were steady, with the yield on the benchmark paper due in 2026 at 8.46%.

On the bourse, stocks were down slightly alongside emerging market shares on Wednesday as U.S President Donald Trump offered few clues on a trade truce with Beijing.

The benchmark JSE Top-40 Index dipped 0.19% to 50,115.49 points while the broader All-Share Index was down 0.11% to 56,338.33.

Entertainment company Multichoice Group and dual-listed Dutch internet group Prosus NV slid to the bottom of the blue-chip index with Multichoice down 2.43% and Prosus closing 2.36% lower.

Preventing further losses was grocer SPAR Group which gained 5.55% after its annual profit rose 10% despite poor consumer sentiment across all of its markets.

Gold miners gained after U.S.-China trade war uncertainty drove up gold prices, with Sibanye Gold up 5.46% and AngloGold Ashanti 5.15% up. (Reporting by Mfuneko Toyana and Naledi Mashishi; Editing by Catherine Evans)

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