The JSE recorded its first positive close in four sessions on Monday, rising 2%, while the rand made limited gains on the back of a softer dollar, breaking a five-day losing streak.
Despite the day’s gains, the rand was still trading around R16.30 to the dollar, the weakest level since October 2020, as global growth fears continue to plague markets.
Emerging market currencies have been on the back foot as recession fears, a hawkish US Federal Reserve, and rising interest rates in major economies weigh on risk-sensitive markets, said TreasuryONE currency strategist Andre Cilliers.
At 6.12pm, the rand had strengthened 0.23% to R16.3370/$, , according to Infront data. It had strengthened 0.25% to R17.0343/€, while it was little changed at R19.7761/£. The euro was steady at $1.0427.
The rand is down 2.24% for the year.
“For now, if the news surrounding all the recession talk subsides a bit, we can expect the rand to pull back towards R16 to the dollar again,” added Cilliers.
The JSE made exaggerated moves on the day, gaining the most in a week in thin trade with US markets closed for the fourth of July holiday.
Focus this week will be on minutes from the US Federal Reserve on Wednesday and from the European Central Bank on Thursday.
“Fed policy minutes on Wednesday will provide markets with some fresh directional impetus,” said FXTM senior research analyst Lukman Otunuga. “Though arguably the tone from central bankers has changed since their meetings — Powell in particular is sounding more hawkish.”
“The most important theme in global financial markets currently is uncertainty around the Fed’s policy outlook. The general consensus is that the Fed and other central banks will be raising interest rates over the next few months, as extremely high inflation and rising inflation expectations make this necessary,” added Otunuga.
The JSE all share gained 2.08% to 67,024 points and the top 40 advanced 2.11%, led by the precious metals and mining index, which rose 4.65% and resources, which added 3.9%. Retailers jumped 2.87%, the industrial metals and mining index 2.63%, banks 1.99%, financials 1.87% and industrials 1.26%.
In Europe, London’s FTSE 100 was 0.89% firmer and France’s CAC 40 rose 0.4%, but Germany’s DAX gave up 0.3%.
Gold lost 0.15% to $1,805.66/oz and platinum 0.73% to $884.50. Brent crude gained 1.98% to $113.58 a barrel.
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