Rand hits 10-day peak

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JOHANNESBURG—South Africa’s rand firmed against the dollar and local stocks climbed on yesterday as investors favoured higher risk assets on improved prospects for a global economic recovery and bullish US company earnings.
The rand shrugged off local data that showed manufacturing output growth slowed on an annual basis in May, which observers said further increased chances of a rate cut in two weeks.
Money market rates fell further after the central bank painted a gloomy picture for the local economy yesterday.
The JSE Top-40 index of blue chips rose 0,77% to 24 070.74 points, while the broader All-Share index also increased by 0,77% to 27 061,19 points, its highest level in over a week.
“As soon as world markets start going higher, people’s risk appetite increases,” said Tubby Goodwin, a trader at Investec Securities.
“Obviously, the riskier assets like emerging markets — and you’ve got to look at our rand in that respect — are attractive, and (investors) start climbing in to them.”
Global stock markets after upbeat US jobs data yesterday.
At 1547 GMT, the rand was trading at 7,58 against the dollar, 0,3% firmer than its previous close of 7,6050, after touching a 10-day high of 7,5378.
On the bourse, retailers and banks led gains.
Nedbank gained 3,88% to 132,05 following a report HSBC Holdings plc , Europe’s biggest bank, is in the early stages of evaluating a bid.
Old Mutual plc which holds a 54% share in Nedbank, gained 2,94% to 12,94 rand.
Heavyweight Anglo American was up 1,30% at 277 rand, while papermaker Mondi climbed 2,38% to 47,30 rand.
Gold shares bucked the upward trend as spot gold slipped, Gold Fields Ltd shedding 1,72 % to 97,50 rand.
Government bonds firmed, with the yield on the 2015 issue falling 2,5 basis points to 7,745 % and that on the 2036 note down by the same margin to 8,78%.
“The (money) market is definitely bullish for a rate cut . . . The probability has increased slightly since (the Reserve Bank Governor’s speech) yesterday.
The market sees a 50/50 chance of a rate cut,” said Neil Evans, bond dealer at Nedbank.
“But . . . we see a 30% chance for that.”
The Reserve Bank’s rates decision is due on July 22.
The Bank has cut the repo rate by 5,5% points to a three-decade low of 6,5% since December 2008
– Reuters.