MARKET WRAP: Rand stays firm on rate cut hopes

After the dust settled on the announcement of President Cyril Ramaphosa’s government of national unity cabinet earlier in the week, local markets turned their attention to global factors, which set the trend for a strong week for both the stock and currency markets.

Sasfin analysts said in their daily market commentary report the rand continued to strengthen against the dollar as expectations grew that US interest rate cuts are imminent, causing the greenback to slip.

The US dollar was near three-week lows on Friday ahead of the payroll data that could impact the outlook for interest rates.

Reuters reported that US non-farm payrolls increased by 206,000 jobs last month, the Bureau of Labor Statistics said in its closely watched employment report on Friday afternoon. Data for May was revised sharply down to show 218,000 jobs added instead of the previously reported 272,000.

Guy Miller, chief market strategist at Zurich Insurance Group, noted that noted a weakening in recent employment data and said a softer-than-expected payrolls number would support the case for a US rate cut in September, Reuters reported.

At 5.35pm, the rand had strengthened 0.14% to R18.2244$, having touched an intraday best of R18.1558/$. It was flat against the euro at R19.7289/€. 

The pound remained strong after the Labour Party won a landslide majority in the UK general election. The rand was last at R23.33084/£, 0.3% weaker. The euro was 0.14% weaker at $1.0826.

“We remain cautiously optimistic over our strategic view for progressive post-election rand appreciation,” RMB analysts said this week. 

The JSE was subdued on Friday amid a dearth of market-moving corporate news. The all share index declined 0.44% to 80,797 points and the top 40 shed 0.35% to 73,729 points. It achieved a record close of 81,155 on Thursday. For the week, the all share index was up 1.37% and is just over 5% higher year to date.

Precious metals and mining and resources stocks were strong on the day, up 1.8% and 0.8%, respectively. Platinum shares benefited from the higher metal price, with Anglo Platinum up 2.8% at R654.88 and Impala Platinum 2.57% higher at R98.54.

Similarly, the stronger gold price helped mining shares, with AngloGold 2.17% higher at R505 and Harmony adding 2% to R176.30.

At the same time in Europe, the FTSE 100 was down 0.59%, France’s CAC was off 0.36% and Germany’s DAX was little changed.

On the commodities market, gold was up 1.2% at $2,384.94/oz to its highest level in a month, while platinum gained 3% at $1,030.50/oz. Brent crude was 0.3% firmer at $87.78 a barrel. 

MackenzieJ@arena.africa