RAND GAINS, BOURSE DROPS

THE RAND gained yesterday on hopes the US and China could reach an agreement at the G20 summit this week to prevent a further escalation in their trade war.

The rand is highly sensitive to changes in global market sentiment on the trade war as China is South Africa’s largest trading partner, and some investors use the rand as a proxy for emerging market risk.

At 5pm, the rand bid at R14.1440 to the dollar, 12 cents firmer than at the same time on Wednesday.

Supporting hopes for a trade war resolution, the South China Morning Post reported, citing sources, that the US and China had agreed to a tentative truce ahead of the meeting between China’s Xi Jinping and US President Donald Trump.

Trump said on Wednesday that a deal with Xi was possible this weekend, but that he was prepared to impose US tariffs on virtually all remaining Chinese imports if the two countries continue to disagree.

On the JSE, emerging market risk appetite failed to lift local stocks as resource firms led by Glencore weakened.

Glencore was the second-biggest decliner on the all share index, tumbling 8.3 percent to R46.10, after a copper mine it owns collapsed in southeast Congo, killing at least 36 illegal miners. It was Glencore’s worst daily fall on the JSE since July 2018.

The all share index dropped 0.61 percent to 58 066.65 points, while the benchmark Top40 index weakened 0.67 percent to 52 056.36 points.

Concerns about weak economic growth also weighed on sentiment on the JSE after the SA Reserve Bank data showed the country’s business cycle has been in a downward phase since December 2013. I Reuters