Business Day

Weaker rand boosts resources

- Maarten Mittner Markets Writer /BusinessLI­VE

The JSE closed firmer on Wednesday, as the weaker rand supported resources and industrial­s‚ while banks and retailers retreated in risk-off trade on a firmer dollar.

The dollar firmed sharply against the euro following a hawkish speech by Federal Reserve chairwoman Janet Yellen in which she stated it would be “imprudent to keep monetary policy on hold until inflation is back to 2%”.

The euro was at $1.1747 soon after the JSE’s close after reaching $1.1717 in intraday trade. Emerging market currencies dropped to mid-year levels as the possibilit­y of an interest rate hike in December increased the attractive­ness of fixed investment­s in the US with less risky exposure to global equities.

The JSE tracked upbeat European markets following Yellen’s remarks‚ with the FTSE 100 up 0.47% and the DAX 30 ahead by 0.4% in early evening trade.

The rand weakened to R13.6046 to the dollar‚ its worst level since July, with the possibilit­y of further dollar strength placing the local currency on the back foot. The rand led losses among its emerging market peers‚ shedding 1.5% against the dollar‚ while Mexico’s peso lost 1.11%‚ Russia’s rouble 0.88% and Turkey’s lira 1.11%. Also putting the rand under pressure were geopolitic­al tensions over North Korea and local political uncertaint­y.

South African government bonds were substantia­lly weaker‚ with the yield on the benchmark R186 rising to its highest level in a month — bid at 8.630% from 8.505% soon after the JSE’s close.

The all share closed 0.26% higher at 55‚214.10 points and the blue chip top 40 added 0.41%. Resources rose 1.1%‚ industrial­s 0.27% and the platinum index 0.26%. Banks dropped 0.96%‚ general retailers 0.92%‚ property 0.72% and the gold index 0.54%.

Rand hedge British American Tobacco rose 1.97%, to R852 and Richemont 1.68%, to R121.39.

The top 40 Alsi futures index was 0.29% higher at 49‚754 points. The number of contracts traded was 21‚758 from Tuesday’s 37‚496.

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