MARKET WRAP: Bleakest week for rand since February’s blackouts

Despite regaining a little bit of ground late on Friday, the rand recorded its worst week since the country experienced days of load-shedding in February. 

The rand passed R15/$ this week, pushed weaker by the continuing tit-for-tat in the ANC about the mandate of the Reserve Bank, and raising questions about the country’s political stability.

Earlier this week, ANC secretary-general Ace Magashule said the party wanted to expand the role of the Bank. President Cyril Ramaphosa has, however, since refuted Magashule’s statement with reassurances that the Bank’s mandate will not be changed.

By 5.30pm on Friday, the rand had lost 2.56% against the dollar since Monday, its biggest weekly loss since it fell 3.3% in mid-February, when Eskom implemented stage 4 power cuts due to generation shortages and diesel supply constraints.

The local currency was the worst performing among emerging-market currencies for the week, with losses also driven by poor local economic data. First-quarter GDP contracted 3.2%, raising questions about whether the Bank will cut interest rates at its next monetary policy committee meeting in July.

The SA Chamber of Commerce and Industry business confidence index dipped to 93 points in May from 93.7 in April, the IHS Markit purchasing managers index fell to 49.3 points in May from 50.3 in April and Absa’s manufacturing PMI dropped to 45.4 points in May from 47.2 in April.

Shortly after the close of the local bourse, the rand had firmed, 0.19% to R14.9674/$, while it had fallen 0.28% to R16.9609/€ and 0.17% to R19.0726/£. The euro was up 0.5% to $1.1331.

At the same time the Dow was about 1% higher at 25,989.65 points, boosted by hopes that the US Federal Reserve may soon cut interest rates. In Europe, the FTSE 100 had gained 0.93%, France’s CAC 40 1.68% and Germany’s DAX 30 0.79%. Earlier, Japan's Nikkei 225 gained 0.53%, while Chinese and Hong Kong markets were closed for a holiday. 

The JSE all share ended Friday up 1.77% at 58,099.8 points, capping its best week, up 4.4%, in seven months. The top 40 gained 1.94%.

Platinum and resource miners led the gains, climbing 3.31% and 2.24%, respectively. General retailers rose 2.2%, industrials 1.76% and banks 1.77%. Naspers provided a boost to the all share, adding 2.51% to R3,459.75.

Ascendis Health added 2.04% to R5 after the debt-burnt company said it would appoint a new CEO in the next three months.

Absa gained 3.31% to R170, after saying its separation from Barclay's bank was within budget and 69% complete.

Bidvest rose 0.21% to R204.58. On Friday, it said its operating performance in the 10 months to end-April “has been acceptable”, noting that trading conditions were challenging. 

Omnia was flat at R43.49. Its chair, Rod Humphris, stepped down with immediate effect on Thursday, amid plans for the company to raise equity in an attempt to cut debt. Its shares fell 1.72% this week, after a 15% slump in the previous week, when it surprised the market with its rights-issue announcement.

Mining and manufacturing production figures, as well as retail sales data for April, are due in the coming week.

mjoo@businesslive.co.za