Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
The rand weakened the most in almost two months on Monday as fears of the US economy falling into a recession spooked global markets.
The local currency touched an intraday worst of R18.6846/$, which was the weakest level in almost two months, after having traded towards R18/$ just last week.
“The rand has pulled back on investor concerns that Friday’s weak US labour market data risked the soft landing for the US economy that has been factored into market expectations,” said Investec chief economist Annabel Bishop.
“Risk aversion rose markedly, causing weakness in equities markets, emerging-market currencies and emerging-market portfolio assets. Concerns about the possibility of a recession have risen again in some quarters, with risk-off permeating markets and the rand weakening.”
At the federal open market committee (FOMC) meeting last week, Federal Reserve chair Jerome Powell signalled the potential for an interest rate cut at the September meeting but only if the data pointed to a weakening labour market.
David Shapiro from Sasfin Securities chose US tech stocks as his stock pick of the day
“Markets are viewing the hawkishness of the FOMC and the US monetary policy authority’s slow transition to indicating the possibility of a cut with concern. A quicker US rate cut cycle is deemed to be needed, given labour market weakness,” said Bishop.
“The rand remains a highly volatile currency, subject to significant fluctuations on changes in global financial market risk sentiment, with further weakness a risk.”
At 7.18pm, the rand had weakened 1.24% to R18.5124/$, 1.67% to R20.2820/€ and 1.15% to R23.6525/£. The euro was 0.44% firmer at $1.0957.
According to the CME FedWatch tool, almost 100% of bets are on the central bank cutting interest rates by 50 basis points at the September FOMC meeting.
The JSE lost 1.19% to 79,577 points and the top 40 shed 1.16%. Precious metals fell 2.18%, banks 1.67%, financials 1.56%, resources 1.56%, retailers 1.42%, industrial metals 1.05%, food producers 1% and industrials 0.8%.
At 7.20pm, the Dow Jones industrial average was 2.18% weaker at 38,872 points and the S&P 500 was down 2.34%. In Europe, the FTSE fell 2.04%, France’s CAC 40 1.42% and Germany’s DAX 1.82%.
In the commodity market, gold lost 1.58% to $2,403.42/oz, while platinum fell 4.99% to $907.92/oz. Brent crude was 1.47% weaker at $76.24 a barrel.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
MARKET WRAP: Rand falls the most in almost two months
Surge in risk aversion hits emerging-market currencies, says Investec chief economist
The rand weakened the most in almost two months on Monday as fears of the US economy falling into a recession spooked global markets.
The local currency touched an intraday worst of R18.6846/$, which was the weakest level in almost two months, after having traded towards R18/$ just last week.
“The rand has pulled back on investor concerns that Friday’s weak US labour market data risked the soft landing for the US economy that has been factored into market expectations,” said Investec chief economist Annabel Bishop.
“Risk aversion rose markedly, causing weakness in equities markets, emerging-market currencies and emerging-market portfolio assets. Concerns about the possibility of a recession have risen again in some quarters, with risk-off permeating markets and the rand weakening.”
At the federal open market committee (FOMC) meeting last week, Federal Reserve chair Jerome Powell signalled the potential for an interest rate cut at the September meeting but only if the data pointed to a weakening labour market.
David Shapiro from Sasfin Securities chose US tech stocks as his stock pick of the day
“Markets are viewing the hawkishness of the FOMC and the US monetary policy authority’s slow transition to indicating the possibility of a cut with concern. A quicker US rate cut cycle is deemed to be needed, given labour market weakness,” said Bishop.
“The rand remains a highly volatile currency, subject to significant fluctuations on changes in global financial market risk sentiment, with further weakness a risk.”
At 7.18pm, the rand had weakened 1.24% to R18.5124/$, 1.67% to R20.2820/€ and 1.15% to R23.6525/£. The euro was 0.44% firmer at $1.0957.
According to the CME FedWatch tool, almost 100% of bets are on the central bank cutting interest rates by 50 basis points at the September FOMC meeting.
The JSE lost 1.19% to 79,577 points and the top 40 shed 1.16%. Precious metals fell 2.18%, banks 1.67%, financials 1.56%, resources 1.56%, retailers 1.42%, industrial metals 1.05%, food producers 1% and industrials 0.8%.
At 7.20pm, the Dow Jones industrial average was 2.18% weaker at 38,872 points and the S&P 500 was down 2.34%. In Europe, the FTSE fell 2.04%, France’s CAC 40 1.42% and Germany’s DAX 1.82%.
In the commodity market, gold lost 1.58% to $2,403.42/oz, while platinum fell 4.99% to $907.92/oz. Brent crude was 1.47% weaker at $76.24 a barrel.
tsobol@businesslive.co.za
JSE and rand fall as big global sell-off continues
Global markets plummet on prospect of US recession
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most Read
Related Articles
Oil prices fall on US recession fears
Gold hardly changed as profit-taking overwhelms US rate hopes
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.