Asian markets may lift JSE on Monday as rand slide continues
The local currency is extending losses, which may benefit rand hedges
The JSE could take its lead from firmer Asian markets on Monday morning, although the rand’s slide continued after Fitch Ratings downgraded SA deeper into junk status.
Risk sentiment seems to be stabilising, no doubt due to the recovering oil price, as investors wait for an Opec meeting on Thursday, said National Australia Bank analyst Tapas Strickland in a note.
Oil has been battered recently due to a price war between Saudi Arabia and Russia, while the Covid-19 outbreak has also put severe pressure on demand.
In morning trade Hong Kong’s Hang Seng was up 1.11% and Japan’s Nikkei 2.5%. Tencent, which influences the JSE via Naspers, added 0.7%.
Gold was down 0.11% to $1,616.09 an ounce while platinum had risen 2.05% to $707.60. Brent crude was down 4.33% to $33.38 a barrel, but has risen about 28% over the past five days.
Pressure on the rand continues, with Fitch’s downgrade coming shortly after SA was relegated to junk status by Moody’s Investors Service.
The rand was on track for its fourth consecutive session of losses on Monday, falling 1.61% to R19.28 a dollar, a new low.
“The sell-off is attributable to both the risk aversion caused by the Covid-19 pandemic, and the country’s downgrade by two rating agencies in the span of a week,” said Peregrine Treasury Solutions executive director Bianca Botes in a note.
The rand fared a little better against the pound, falling 1.27% to R23.56. UK Prime Minister Boris Johnson was admitted to hospital at the weekend for persistent Covid-19 symptoms.