MARKET WRAP: Rand bulls still in charge after Ramaphosa’s win

The rand retained the stronger bias it has enjoyed this week while the JSE was lower in line with its global peers. A short-lived bounce for world stocks faded as fears resurfaced about an economic downturn.

The rand bulls have taken charge, helping the local unit recover all of last week’s losses as political uncertainty eased after the ANC elective conference, Sasfin said in its daily market commentary.

The rand has notched up gains since Monday’s news that President Cyril Ramaphosa emerged victorious in the battle to lead the ANC for a further five-year term.

“The market clearly believes that the Ramaphosa faction’s strong showing at the elective conference is constructive for SA, as the prospect of policy continuity and more reform progress has been welcomed,” Sasfin analysts said.

The president’s first big task is likely to be a cabinet reshuffle in the new year. “Should he announce a cabinet devoid of compromised comrades and instead filled with individuals closely aligned with the reformist vision investors are hoping for, the rand’s advance will strengthen and extend,” they said.

At 5.56pm the rand was marginally firmer at R17.1648/$, while it gained 0.25% to R18.1763/€ and 0.59% to R206409/£. The euro was flat at $1.0594.

The JSE all share index ended 0.83% lower at 73,225 points, while the top 40 shed 0.85%. The main drags on the equities market came from the industrial materials index, which shed 2.94%, and industrial metals and mining, which was 1.71% lower. The strong performers from Wednesday, the resources and precious metals and mining indices, were down 1.69% and 1.66%, respectively. Banks and financials shed 0.86% and 0.79%.

Global stocks were mostly lower, with Reuters reporting that Wall Street’s main indices dropped after fresh data underscored strength in the US economy and aggravated concern about the Federal Reserve’s continued policy tightening.

Fears of a recession after the US central bank’s prolonged interest rate hikes have weighed heavily on equities this year.

Fresh US data showed the final estimate of third-quarter GDP increased at a 3.2% annualised rate, above the previous estimate of 2.9%, according to Reuters. Meanwhile, a labour department report showed the number of Americans filing for state unemployment benefits increased to 216,000 last week, indicating a still-tight labour market.

At 5.35pm, the Dow Jones industrial average was 1.4% lower, while the London FTSE 100 had shed 0.37%, France’s CAC 40 1.1% and Germany’s DAX 30 1.42%.

Spot gold was 0.96% lower at $1,795.62/oz, while platinum eased 0.64% to $990.02.  Brent crude was 0.86% higher at $82.93 a barrel.

MackenzieJ@arena.africa