The rand and SA bonds weakened on Monday as foreigners sold local assets in the wake of record numbers of Covid-19 cases, while President Cyril Ramaphosa is expected to address the nation in the evening on the latest virus developments.
The R2030 government bond weakened, with the yield rising five basis points to 8.84%, the highest since December 29 2020, as foreigners reduce their holdings of SA government debt. Bond yields move inversely to their prices.
“Thin liquidity conditions have exacerbated the impact of foreign sales of SA portfolio assets, specifically net bond sales of R7.1bn, so far this year,” said Investec chief economist Annabel Bishop.
The rand fell against the dollar along with its emerging-market peers, and at 7pm, it had weakened 1.5% to R15.5108, 1.06% to R18.8731/€ and 1.34% to R20.9774/£. The euro had lost 0.59% to $1.2148.
President Cyril Ramaphosa is set to address the nation on Monday night. This comes as the country recorded more than 17,000 new coronavirus infections in a 24-hour period.
The rand lost its ability to hold on to levels below R15/$ as the local economy continues to face difficulties, while the global environment has been anything but easy since the new year kicked off, said Peregrine Treasury Solutions executive director Bianca Botes in a note.
The JSE closed firmer on the day, with its global peers mixed as investors assess the outlook for more US Covid-19 relief stimulus.
On Friday, US president-elect Joe Biden pledged a hefty economic stimulus rollout, which he said will be “in the trillions of dollars”.
“Equity markets kicked off 2021 on a solid footing. Investor focus remains on vaccine optimism and massive stimulus that may come with a Biden administration that is backed by the House and Senate,” said FXTM chief market strategist Hussein Sayed.
Despite the weaker rand, the JSE all share set another new record high on the day.
The JSE all share gained 0.38% to 63,759.93 points and the top 40 0.5%. Banks fell 2.13%, financials 1.61% and resources 0.26%. Industrials gained 1.62% and the gold mining index 0.99%.
The Dow Jones Industrial Average was last seen 0.52% lower at 30,935.30 points.
The FTSE 100 lost 1.09%, France’s CAC 40 0.78% and Germany’s DAX 30 0.8% on concerns over rising Covid-19 infections rates in Europe.
Gold was little changed at $1,848.61/oz, while platinum fell 2.98% to $1,030.10. Brent crude was 1.16% lower at $55.60 a barrel.
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