Rand is gradually clawing back some lost ground

THE RAND yesterday firmed, bucking unrest in the US and that country’s tensions with China as South Africa’s move to level 3 of the lockdown, to reopen the economy further, boosted market optimism.

The rand changed hands 0.27 percent stronger at R17.35 against the dollar by 5pm, 0.14 percent stronger against the pound at R21.65, and 0.28 percent stronger against the euro at R19.32.

Investec chief economist Annabel Bishop said the rand was benefiting from the carry trade and improved market optimism as the recovery of the global economy was believed to be in sight.

“The domestic currency will likely battle to easily break through R17 to the dollar, as this is a major resistance level, unless another surge of global market optimism occurs, sweeping it stronger on search for yield,” Bishop said.

“However, while markets are becoming more optimistic that the worst of Covid-19’s impact is over, there is no certainty this is the case, and the rand is at marked risk of even slight sentiment changes.”

Bishop said the rand was likely to strengthen further to R16 against the greenback before the end of the year, provided marked risk averse events did not occur.

The JSE All Share Index rose 0.88 percent to 50 929.59 points, and the Top40 index closed 0.87 percent higher at 46 950.12 points.

The general retailers index firmed 0.68 percent to 3 251 points as Massmart inched up 2.71 percent to R21.95 and Pick n Pay was up 2.74 percent to R54.75.

However, Shoprite and Woolworths were down 13 percent at R103.34 and 0.59 percent at R28.75, respectively.

The mining index was 0.69 percent higher at 45 207 points as Sibanye-Stillwater rose 3.43 percent to R33.48 and Impala Platinum rose 2.68 percent to R120.22.

Anglo American rose 0.67 percent to R368.01, while Harmony Gold gained 1.57 percent to R58.30.

The banking index fell 1.61 percent to 5 021 points as Standard Bank fell 5.03 percent to R96.50.

Absa was down 2.08 percent to R79.51, Nedbank fell 1.56 percent to R97.24, while FirstRand gained 0.45 percent to R40.31.

Old Mutual’s Izak Odendaal said JSE companies that were dependent on the local economy reflected its dire state compared to those that were not dependent on the economy to generate revenues and profits.

“Simply looking at the three traditional sub-sectors of the JSE tell the story.

“The industrials sector is somewhat mislabelled, as it is dominated by global consumer-facing companies.

“Still, it is only marginally negative year-to-date, driven by Naspers/Prosus and a weaker rand,” he said.