SA markets end week on mixed note

SOUTH African markets ended fairly mixed on Friday after yet another volatile week, one dominated by offshore markets.

The dollar rising against a host of currencies, including the rand, gripped investors’ imagination, prompting the Mexican central bank to raise interest rates by 50 basis points in an attempt to shore up the falling peso.

The rand slid to lows of R14.64/$ on Friday, its weakest since mid-September, before bouncing back to R14.38 later in the day.

The rand’s volatility is likely to concern the Reserve Bank’s monetary policy committee, which meets this week to decide on interest rates. Governor Lesetja Kganyago said last month that South Africa could be close to the end of the ratehiking cycle.

The weaker rand poses a danger to consumer inflation, which has been relatively contained since peaking at 7% earlier this year.

The dollar has been strengthening since Donald Trump swept to victory in the US presidential vote last week. Under a Trump presidency, analysts anticipate increased fiscal spending, which could stoke consumer inflation, triggering frequent interest-rate rises.

“Wow, what a two weeks we have had. It seems that markets are on edge, waiting to see the sort of cabinet appointments Trump is going to make,” said Charl Botha, portfolio manager at Mercato Financial Services.

As was the case last week, the strong dollar hurt some commodities, notably gold, whose price flirted with the $1 200/oz level, last seen in February.

The weaker dollar-denominated gold price hit JSE-listed gold stocks, which fell for a second week. Diversified miners and iron ore-aligned stocks took a breather, save for Assore, following last week’s strong performance.

Outside the resource market, financial stocks fared decently, as did industrials.

Retailers, under intense pressure, found decent buying interest, with the exception of Lewis, which shed a further 9% after dropping 13% last week.

The All Share index settled 0.66% higher at 53 626.01.