Rand's one-week losing streak weighs on JSE

The rand fell for the fifth-consecutive session on Wednesday, its longest losing streak in more than five months, as global investors shied away from riskier assets amid concerns over slowing global growth.

The weakening rand was further decreasing chances of an interest-rate cut in coming months, which would provide an economic boost, said FNB Wealth & Investments’s Wayne McCurrie. It was also worth noting that fair-value for the rand remained well below R14/$, he said. 

As the JSE closed the rand was 1.02% weaker at R14.4012/$, having lost 9% since its 2019 best of R13.2349/$ on January 31. It was 0.75% weaker at R16.1231/€ and 1.18% softer at R18.6538/£.

A weaker rand, which usually benefits local miners because it makes dollar-denominated commodities worth more in local currency terms, failed to lift resources stocks as the greenback has rallied recently. A firmer dollar generally puts pressure on commodity prices as it makes these more expensive. The  resources index lost 1.16% on Wednesday.

The JSE all share lost 0.74%, led by food and drug retailers, which fell 2.5%, while the banking index dropped 2.01%.

The local bourse remains up 11.84% so far in 2019, benefiting from a global equity rally in 2019 prompted by a more dovish turn by the US Federal Reserve, as well as easing tensions between Washington and Beijing over trade.

Although concerns remain, some positive economic signs out of China were also weighing on equities, as this could lead to a reduction in stimulus measures from that country’s government, said SPI Asset Management head of trading Stephen Innes.

It was difficult to tell where SA equities fit into the global context, said Sasfin Wealth deputy chair David Shapiro, amid rising US markets and softening confidence elsewhere.

“To try to work out it all out is becoming difficult,” Shapiro said, adding that there had been some peculiar movements on the JSE recently, such as with retail stocks. It seemed that this may be due to very large trades by one or more large investors, he said.

gernetzkyk@businesslive.co.za