MARKET WRAP: Rand hits R15/$ for the first time in eight months

The JSE closed flat on Thursday, as the rand hit R15/$ for the first time in eight months, putting pressure on banks but benefiting local miners.

The rand weakened past the psychologically important level despite a late statement by President Cyril Ramaphosa clarifying the ANC's stance on the Reserve Bank. He said the ANC wanted the Bank to be publicly owned, but this was not affordable.

Shortly after the JSE closed, the rand had weakened 0.59% to R14.9528/$, 1.21% to R16.8805/€ and 0.89% to R19.0163/£. The euro was up 0.62% at $1.1289. The rand briefly hit R15/$ before recovering slightly.

Contradictory statements regarding the Bank’s mandate have dented confidence towards SA, analysts say, even as investors await announcements regarding Eskom’s finances, as well as other policy changes from the new cabinet.

Earlier, ratings agency Moody’s Investors Service released a global macroeconomic outlook, saying in its section on SA that it expected a 1% GDP growth rate in 2018, as well as an interest-rate cut in July. The agency added that SA looked set to enter a technical recession, denoting two consecutive quarters of economic contraction.

Global sentiment, however, has soured on a lack of progress in talks between US and Mexican officials amid threats of tariffs over illegal immigration. US President Donald Trump has also issued a new threat to hit China with tariffs on “at least" another $300bn worth of Chinese goods.

The euro pushed higher on Thursday, while gold miners gave back earlier gains, ending lower. Miners generally benefit from a weaker rand, as this makes their output — sold in dollars — more valuable in rand, while a weaker rand implies higher inflation — to the detriment of banks and retailers.

The all share rose 0.03% to 57,090.5 points, and the top 40 0.02%. General retailers lost 0.93% and banks 0.67%. Platinums added 1.36%.

Global sentiment was buffeted by multiple events, notably a European Central Bank (ECB) interest-rate announcement that was seen as less dovish than expected.

Despite expectations of a dovish ECB statement, revisions to the growth and inflation projections were not all as negative as some would have assumed, based on recent inflation data and growing global risk, Oanda analyst Craig Erlam said.

Rand hedge British American Tobacco gained 3.51% to R554.62.

TFG gave up 1.98% to R167.97 and Woolworths 1.08% to R45.07.

UK industrial landlord Stenprop fell 1.89% to R20.80. It said earlier that net rental income rose to £33.9m in the year to end-March from £32.9m in the prior comparative period, though profit after tax fell to £23.8m from £39.4m.

Omnia gained 0.32% to R43.50, having said earlier that board chair Rod Humphris had stepped down with immediate effect. Omnia’s shares slipped to a 10-year low this week after the group said it needed to issue new equity to cut debt.

Shortly after the JSE closed, the Dow was up 0.2%, while in Europe, the FTSE 100 had gained 0.46%. The DAX 30 and CAC 40 had both fallen 0.32%.

Gold added 0.39% to $1,335.47/oz, while platinum fell 0.21% to $803.66. Brent crude was flat at $60.52 a barrel.

gernetzkyk@businesslive.co.za