MARKETS RAND, STOCKS POST BIG GAINS

THE RAND recovered yesterday after a sharp fall in the previous session when data showed the economy contracted by the most on record in the second quarter.

At 5pm, the rand was 1.85 percent firmer at R16.62 to the dollar, after slumping more than 1 percent on Tuesday when a plunge in gross domestic product rattled already fragile investor sentiment.

“Despite all of this negativity, the rand is standing tall against the dollar and other G10 currencies today (yesterday),” said Lukman Otunuga, senior research analyst at FXTM.

“The rand remains influenced by external drivers in the form of Covid19 developments, US-China trade and global sentiment.”

The South African economy shrank 51 percent in the second quarter due to the coronavirus restrictions, its fourth consecutive quarterly contraction, data showed on Tuesday.

Yesterday, a survey showed that South Africa’s business confidence recovered from a record low in the third quarter of the year as coronavirus-led curbs were largely lifted, but consumer sentiment remained heavily depressed.

This helped buoy stocks, with the all share index seeing its biggest daily rise since August 4 in terms of points. It rose 1.42 percent to 55211.34 points. The Top40 index gained 1.31 percent to 50838.92 points.

Companies that benefit from a strong economy, namely banks and retailers, led the blue-chip index higher, with retailer Shoprite the biggest gainer, up 10.03 percent, followed by three of South Africa’s major banks – Standard Bank, Nedbank and Absa, which closed up 9.03 percent, 8.9 percent and 8.18 percent, respectively.

Bonds were weaker, with the yield on the benchmark 2030 government paper up 2 basis points to 9.275 percent. I Reuters