MARKETS WRAP

THE RAND edged higher yesterday, extending the previous session’s gains on dollar weakness and optimism over a further easing of the country’s coronavirus lockdown.

With no major domestic data releases this week, the rand is likely to react to international news such as the release of US Federal Reserve minutes from its most recent meeting.

At 5pm, the rand traded at R17.16 versus the dollar, 0.98 percent stronger than its previous close.

Domestic financial markets shrugged off the resumption of planned power cuts by Eskom after breakdowns at the utility’s coal-fired power stations.

Eskom’s struggles are one of the main reasons why investors are cautious about the growth outlook for South Africa.

Commerzbank’s emerging market analyst Elisabeth Andreae said in a note that the power outages suggested that the road out of the coronavirus crisis was going to be long and rocky.

“That means the rand continues to depend on global factors for a further recovery, above all positive risk sentiment,” said Andreae.

In the stock market, trade tensions between the US and China kept the pressure on market heavyweight Naspers while falling precious metal prices after a strong run kept resources companies in check.

Banks, which had been one of the worst performing sectors since the March crash, showed some resilience.

The broader all share index closed down 1.04 percent to 56 433.28 points, back to its end July levels. The blue-chip Top40 companies index was down 1.14 percent to end the day at 52 137.86 points.

Government bonds weakened, as the yield on the 2030 bond rose 2.5 basis point to 9.315 percent. I Reuters