MARKET WRAP: Rand and JSE gain as investors hedge bets on US-China signing
The rand and other emerging-market currencies could be boosted by the US-China deal, as it bodes well for global growth prospects
The rand ended a four-day losing streak on Wednesday, trading slightly firmer by the JSE’s close, while the latter recorded its fourth day of gains, with investor attention fixed firmly on events at the White House.
Global focus is on the sealing of the first phase of a trade deal between the US and China. The prospect of the finalisation of the deal boosted global investor confidence as the day wore on.
The agreement caps nearly two years of conflict over tariffs between the world’s two largest economies, with hundreds of billions of dollars involved, roiling financial markets, uprooting supply chains and slowing global growth, reported Reuters.
The agreement aims to vastly increase Chinese purchases of US manufactured products, agricultural goods, energy and services. US officials said on Tuesday, however, tariffs against China may not be lifted until a more comprehensive deal is reached.
National Australia Bank analyst Tapas Strickland said in a note that further tariff relief is likely to happen only after the November US presidential elections, suggesting that Wednesday’s agreement may be as good as it gets for 2020.
The rand and other emerging-market currencies could be boosted by the US-China deal, as it bodes well for global growth prospects, and could raise demand for SA exports, such as commodities.
At 5.34pm, the rand had strengthened 0.12% to R14.3805/$, while it was 0.11% weaker at R16.0346/€ and flat at R18.7164/£. It is now down 2.73% against the dollar so far this year, having now erased all of 2019’s gains.
Earlier, Asian markets were under pressure with the Shanghai Composite falling 0.54%, Hong Kong’s Hang Seng 0.39% and Japan’s Nikkei 0.45%.
The Dow was last seen up 0.58% to 29,106.88. In Europe, the FTSE 100 was flat, France’s CAC 40 down 0.30% and the German DAX 30 down 0.35%.
The JSE all share was up 0.17% at 58,063.59 points and the top 40 0.21%. Banks gained 0.22%, financials 0.18%, gold miners 1.07% and the platinum index 0.79%. Resources fell 0.81%
“Gold investors got the green light to jump back on lingering trade concerns and a softer second day of earnings results. Significant tariff relief does not seem to be happening this side of the election and that should be very bullish for gold,” said Oanda senior market analyst Edward Moya.
“Gold was boosted earlier in the session on confirmation of the slowest economic growth from Germany in six years and softer UK inflation data, which opens the door for the Bank of England to ease a lot sooner than many were expecting.”
Gold gained for a second consecutive day, up 0.21% to $1,549.64/oz and platinum 3.3% to $1,016.77. Gold has now gained 2.1% in 2020 and platinum 5.38%. Brent crude was down 1.18% to $63.66 a barrel.
Consumer internet company Prosus said earlier that it had raised $1.25bn (R18bn) through a 10-year bond, reporting high demand for its notes as it considers its options in the wake of losing a bidding battle for food delivery service Just Eat.
The bond issuance comes after Prosus, which was spun out of Naspers in September, said it is interested in building a rival delivery service to Silicon Valley giants Uber Eats and Amazon-backed Deliveroo. Its shares were down 0.53% to R1,130.25.