Weaker rand boosts resources

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.