LOCKDOWNS EASING LIFTS RAND

THE RAND firmed more than 1 percent yesterday, lifted by hopes of economic recoveries at home and abroad as more countries eased coronavirus lockdowns.

Stocks rose as factories, restaurants, mines and shopping malls reopened and millions returned to work.

At 5pm, the rand was 1.03 percent firmer at R17.35 to the dollar, after closing at R17.53 on Friday in New York, adding to gains of more than 8 percent in May in an advance spurred mainly by offshore factors and dampening Covid-19 worries.

“Rising global market confidence that the recovery in the global economy is indeed in sight, and growing optimism that the worst may be over, has driven yield-seeking investors into riskier assets,” said Investec’s Annabel Bishop.

Manufacturing PMI recovered slightly in May from April’s record low, although factory activity still contracted heavily, while the world’s number two economy, China, also recorded improved factory activity.

Some relief also came from easing trade tensions between China and the US. Yesterday, Washington stopped short of imposing new tariffs or sanctions on Beijing and left the so-called Phase 1 trade deal intact.

Local economic data was mixed. Factory activity inched up in May but remained in overall contraction. New car sales tumbled again, down 68 percent.

South Africa’s economy was already in recession when the pandemic struck. The central bank expects the economy to shrink 7 percent this year, but economists expect an even deeper recession as well as deep job losses.

The broader all share index rose 0.88 percent to close at 50 929.59 points while the blue-chip Top40 index closed up 0.87 percent to 46 950.12.

Bonds also firmed, with the yield on the 2030 bond down 13.5 basis points to 8.76 percent. I Reuters