A midnight fright made the rand jump to R14.70/$
An emerging market currency ‘flash crash’ was blamed on Apple saying its Chinese sales were worse than expected
The rand, along with other emerging market currencies, suffered a midnight shock on Wednesday, which saw it jump to nearly R14.70/$ from about R14.40/$.
“Currency markets were thrown into a spasm early in Asia on Thursday, with the Japanese yen surging during less-than-liquid trading hours, following weeks in which market sentiment has soured,” Dow Jones reported.
By 6.55am on Thursday morning, the rand had calmed back to R14.52/$, R16.50/€, and R18.22/£.
Dow Jones said a confluence of factors were behind the emerging market currency jolt.
“Japanese markets are closed for a holiday, leaving fewer institutional investors and traders to moderate any violent price swings,” the report said.
But a key reason for Wednesday’s ‘flash crash’ was probably Apple, which fell 7.55% in what Nasdaq terms after-hours trade.
This set a sour tone in Asian markets on Thursday morning, indicating the JSE is likely to continue its slide; it dropped 2.79% on Wednesday.
Naspers’s dominant asset, Tencent, was down 0.2% to HK$306. The top 40’s largest constituent fell 3.71% to R2,785 on the first trading day of 2019.
The top 40’s second-largest constituent, BHP, was up 0.3% to A$33.78 in Sydney ahead of the JSE’s opening on Thursday.
BHP closed 3.66% lower at R292.66 on the JSE on Wednesday.
Apple’s share price fell after CEO Tim Cook warned shareholders that iPhone sales were slowing faster than expected.
“While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in greater China,” Cook said.