RAND LACKS DIRECTION, JSE UP

THE RAND was flat against the dollar late on Friday, struggling for direction after surprise gains earlier in the face of a darkening growth outlook following a week of nationwide power cuts and ongoing uncertainty over US-China trade talks.

At 5.30pm, the rand was 0.07 percent firmer at R14.4790 per dollar, hardly budged from the morning’s open as investors awaited details of a cabinet decision on how to deal with a crisis at power utility Eskom.

The South African government on Friday asked industry for the cheapest and quickest options to ease a power crunch, as cabinet held an emergency meeting to try to resolve a crisis threatening growth.

Eskom, which cut power for a ninth consecutive day on Friday, is choking under a massive R450 billion debt burden and struggling to meet demand because its creaking coal-fired power stations have not been maintained properly.

The rand surprised market watchers by racing to a five-month high in the session on Friday, hitting R14.37 before pulling back, in what some analysts said was a move backed by the high yield on offer, more so after local inflation fell again and the US Federal Reserve held rates.

In the fixed income market, the yield on the benchmark government bond due in 2026 was down 1.5 basis points to 8.32 percent.

On the bourse, stocks soared alongside emerging market shares as reports of a Sino-US trade deal, as well as the prospect of a smooth Brexit, fired risk appetite across the globe.

The benchmark JSE Top40 index climbed 1.81 percent to 50 499.02 points while the broader all share index rose 1.66 percent to 56 749.12 points.

Financials were the biggest winners on the blue-chip index on the back of a firmer rand. Insurance and specialised finances company Discovery topped the bourse, up 6.13 percent at R122.

Banks followed, with jumping 5.14 percent to R152.88, and rising 4.36 percent to R169.50. I Reuters