Emerging markets under pressure

THE RAND traded stronger yesterday at around R13.50 to the dollar, but still lower than it was after last week’s gains.

Peregrine Treasury Solutions corporate treasury manager Bianca Botes said the rand lost some ground in the overnight session. “All emerging markets, bar Turkey, came under pressure as the trade spat between the US and Beijing caught momentum once again, this time focusing specifically on technology,” said Botes.

At 5pm the rand was bid at R13.53, a 5c decrease from Monday’s same time bid. Against the pound sterling the rand shed 2c to R17.90 from R17.88 and to the euro the rand was 9c stronger at R15.79 to Monday’s R15.88.

TreasuryONE dealer André Botha said the rand would track most of the emerging markets (EMs) yesterday with the risk sentiment not in the EM’s favour at the moment. The rand was expected to be on the back foot yesterday.

“The market has started to become worried about the effect that a trade war will have on the global economy, and we have seen EM currencies under pressure due to this,” said Botha.

He said the US dollar had been on a slippery slope as US companies were questioning the tariffs being imposed by President Donald Trump and how they will still be profitable in light of the tariffs.

“Another factor that has shown how the risk sentiment has slipped from the market is the fact that the Dow Jones index closed below its 200-day moving average for the first time in 501 trading sessions. This shows that the market has turned risk-averse and needs some clarity on where the global economy is heading before any risk taking will resume.”

The day’s biggest gainers were Woolworths, which rose by 3.61 percent to R55.19, followed by PSG Konsult, which increased by 2.08 percent to R9.80, while Vivo Energy appreciated by 1.92 percent to R26.50. Brait rose by 1.92 percent to R27.20 and African Rainbow Minerals grew by 1.09 percent to R108.26.

The losers were led by Sibanye-Stillwater which dived by 11.19 percent to R8.33, followed by Steinhoff African Retail depreciating by 4.61 percent to R16.57. Montauk sank by 4.20 percent to R91.00, while Impala Platinum shed 3.69 percent to R19.55. Naspers fell by 3.38 percent to R3 098.50.