The rand fell by nearly 1% to its weakest in three weeks yesterday on the back of stocks on the JSE also plunging as global investors were disappointed by the lack of any anticipated big measures to revive China’s economy.
Late last month, China unveiled comprehensive economic support measures including a reduction of banks’ reserve requirements and key lending rates, with markets now awaiting signals of further policy support from the fiscal side.
However, gains were capped after Chinese authorities announced no new major stimulus plans at a highly anticipated economic briefing.
The Chinese’s Hang Seng instead fell by 10% yesterday, prompting Satrix quantitative portfolio manager Siyabulela Nomoyi to say on X: “Looks like the ‘stimulus’ announcement has just turned out to be a “we were only playing”.
The domestic currency yesterday eased by 0.95% to R17.58 against the US dollar, its weakest since 16 September, on lack of investor appetite towards emerging markets currencies.
The rand has been on the back foot for the past week as tensions in the Middle East escalate and positive data out of the US prompted investors to become more cautious.
Analysts have said that the combination of Middle East tensions and better-than-expected labour markets had given investors reason to pause.
Citadel Global director Bianca Botes said the market dynamic was largely unchanged as investors continue to keep an eye on data to fine tune their interest rate expectations.
“The dollar remains near a seven-week high, but edged slightly lower during Asian trade following a robust run over the past few sessions. The focus shifts to the Fed meeting minutes, which will be released on Wednesday,” Botes said.
“The rand remains range bound as markets seek further direction.”
Meanwhile, the JSE index fell as much as 1.5% toward the 85 000 index points level early yesterday before recovering slightly to 85 491 index points by 5pm.
Resource-linked sectors, particularly metal and mining stocks, were the hardest hit, with Kumba Iron Ore falling 6.2% to R24.62 per share and Anglo American falling 5.2% to R525.48 per share.
Tech giants Naspers and Prosus also ranked among the biggest losers, mirroring the performance of Asian tech stocks, which followed overnight losses in US peers amid regulatory jitters and unfavourable analyst commentary.
Meanwhile, traders were focused on key events later in the week, including the release of U.S. inflation data, the Federal Open Market Committee minutes, and earnings reports from major US banks on Friday.
BUSINESS REPORT
