Rand firmer, gold stocks prop up the JSE

THE RAND firmed yesterday as the dollar weakened after US President Donald Trump criticised the head of the Federal Reserve for raising interest rates.

At 5pm, the rand bid at R14.3564 to the dollar, 29 cents stronger than at the same time on Monday, its firmest since Thursday, in what traders said was the beginning of a consolidation pattern with momentum indicators showing the unit was oversold.

The rand crashed to a two-year low last week as the financial crisis in Turkey rattled emerging markets broadly, adding to concerns about the impact of the US-China trade spat on global economic growth.

In an interview, Trump said he was “not thrilled” with Federal Reserve chairman Jerome Powell for raising interest rates, clobbering the dollar.

The impact of Trump’s comments on US monetary policy outweighed him saying that he was not anticipating much from this week’s trade talks between the US and China.

Investors are hoping that the discussions will go some way towards resolving the damaging dispute.

Locally, market focus was on July consumer price inflation data due today.

“Inflation data for July is likely to illustrate whether and to what extent the rand depreciation of the past few months will be reflected in higher consumer prices despite the weaker economy,” Commberzbank analysts said in a note.

“If inflation was to come in above expectations this would probably fuel rate hike expectations, which might support the rand. Conversely a weaker-than-expected rate might provide additional depreciation pressure for the rand.”

Bonds also firmed, with the yield on the benchmark 2026 paper down 5 basis points to 8.985 percent.

The blue chip JSE Top40 index closed little changed at 51 125.84 points, while the all share index was largely steady at 57 1876.66 points.

The gold index, however, rose 2.37 percent as the bullion prices touched a one-week high on weaker dollar.

Harmony Gold was up 2.27 percent to R21.65 – tracking the gold price – despite posting a 43 percent fall in annual earnings, hurt by impairments and a loss relating to debt denominated in dollars, and a setback to its safety record.

Shoprite bucked the trend as shares fell 4.15 percent to R203 after it reported its first annual earnings decline in 19 years.