Rand, stocks rally despite weak economic data

THE RAND and stocks on the JSE continued their strong rally last week.

This bullish movement came despite the news that South Africa’s Sacci Business Confidence Index declined sharply to 91.8 in March from 93.4 in the previous month.

The index was down mainly due to the slow pace of structural reforms, disruptions in activity associated with Eskom’s power blackouts and the recent increase in electricity tariffs.

South Africa’s mining production recorded a decline of 7.5 percent during February, while manufacturing production increased by just 0.7 percent.

The better than expected job data for the US in March, released the previous Friday, gave a strong momentum to share prices across the globe.

In the US, the S&P 500 on Wall Street broke through the 2 900 level on Friday and the Dow Jones Industrial index once again traded above the 26 000 level.

Better than expected trade data from China also helped to boost appetite for more risky assets on most bourses.

China’s exports rose by 14.2 percent in March, topping expectations of a 7.3 percent rise from a year ago.

Imports on the other hand shrunk by 7.6 percent.

On the JSE, the all share index recorded an increase of 629 points, or 1.1 percent, and closed well above the 58 000 level at 58 405 on Friday.

The index is already 10.33 percent higher than at the beginning of the year.

The resources 10 index rallied by 16.38 percent since the beginning of the year despite a marginal decrease of 0.3 percent last week.

The Industrial 25 index improved by 2.1 percent, and for the year to date has gained 12.34 percent.

Financials moved sideways last week and had improved by only 0.2 percent.

Listed property remained under pressure and the index inched up by 0.4 percent, and for the year rose by only 0.6 percent.

The rand, in line with other emerging market currencies, recovered for the third consecutive week.

On Friday evening the local currency traded at R13.94, or 14 cents stronger than the previous week.

It had gained 2.31 percent during the last month.

Against the pound, the rand appreciated by 9c to R18.24, recording a 2.9 percent gain over the month to date.

Against the euro, the local unit rather moved sideways during last week and was at R15.80 on Friday evening, but also had gained by 2.2 percent over the last month.

This week investors will look out for the release of South Africa’s inflation rate and retail sales data for March.

Globally, the UK will release its latest unemployment rate, while China will announce its gross domestic product growth rate for the first quarter of 2019.

Attention this week will also concentrate on many global developed countries that will release their latest Purchases Managers Indices, balance of trade numbers and inflation rate figures.