Rand and JSE firm after GDP news

The JSE closed firmer on Tuesday, while the rand broke a four-day losing streak after data showed that SA’s GDP grew better than expected in the fourth quarter of 2020.

The rand firmed as much as 1.6%, reaching an intraday best of R15.2784%, according to Infront data.

“Although the GDP data has possibly afforded the rand a stronger bias, the day’s stronger move is more of a correction from the losses witnessed on Monday,” said Citadel Global executive director Bianca Botes.

Stats SA data showed the economy grew at a seasonally adjusted and annualised 6.3% in the fourth quarter, better than the 5.6% expansion predicted by a median estimate of 15 economists surveyed by Bloomberg before the release.

GDP contracted by 7% in 2020, a little better than the Treasury’s forecast of 7.2%.

At 6.10pm, the rand had strengthened 0.7% to R15.4112/$, 0.35% to R18.3162/€ and 0.27% to R21.4093/£. The euro was 0.31% firmer at $1.1885.

“The negative growth figure for 2020 as a whole again demonstrates how much economic ground was lost last year,” said North-West University Business School economist Prof Raymond Parsons.

“Fortunately, the economic news in 2021 is better. High-frequency data suggest that a strong recovery is under way this year,” said Parsons.

The JSE tracked mostly firmer global markets as investors digest inflation concerns.

On Monday, US treasury secretary Janet Yellen dismissed fears that President Joe Biden’s $1.9-trillion pandemic-relief bill is too big and that it will cause an inflation problem. Yellen believes the aid package will provide enough resources to fuel a “very strong” US economic recovery.

“It’s been a hectic few weeks for markets and it’s still very much a stimulus-induced rally and rotation in equities. Yet, until US yields stop rising, investors will continue to shun any longer-duration assets,” Axi chief global markets strategist Stephen Innes said.

The JSE all share gained 0.34% to 68,655.96 points and the top 40 0.3%. The gold mining index rose 5.22%, banks 1.54%, industrials 1.28%, financials 0.85% and platinum miners 0.67%. At 5.30pm, the Dow Jones industrial average was 0.82% firmer at 32,063.68 points. Gold gained 1.92% to $1,715.22/oz and platinum 3% to $1,169.07. Brent crude was 0.73% lower at $67.59 a barrel.