The rand weakened the most in four weeks on Monday, while the JSE closed slightly softer amid mixed global markets as investors looked to US corporate earnings for the first quarter to gauge how companies fared in an environment of high inflation and rising interest rates.
Having briefly broken below R18 against the dollar in the previous session, the USD/ZAR is consolidating its position above the 18/$ mark as we enter the start of the week, said RMB market macroeconomist Siobhan Redford.
“The degree of negativity plaguing the domestic markets due to the structural challenges that SA faces is extreme — including the dire rotational power cuts. As a result, the rand remains under pressure,” she said.
Despite much of the load-shedding risks being factored in, investors are concerned about the situation escalating to higher stages as winter approaches.
Investec chief economists added that concerns about a global recession have added to the risk-averse global financial market environment, and emerging-market currency weakness, particularly for the rand.
At 5.54pm, the rand had weakened 1.23% to R18.3074/$, 0.45% to R19.9718/€ and 0.92% to R22.6268/£. The euro was 0.69% weaker at $1.0915.
In the US, corporate earnings got off to a positive start, with the banking sector leading the way with giants JPMorgan and Wells Fargo beating expectations on Friday — both boosted by higher interest rates.
Investors are particularly eyeing the overall health of the financial sector after the collapse of Silicon Valley Bank last month prompted a liquidity crisis. More banks are expected to release reports this week, including Bank of America and Morgan Stanley.
“A lack of global data may restrain market moves, given the limited mid-month data and events calendar, with local inflation the only top-tier release this week,” said Matete Thulare, head of forex execution at RMB.
The JSE all share index lost 0.19% to 78,723 points and the top 40 eased 0.13%. The precious metals and mining index added 1.14%, resources collected 0.83% and industrial metals firmed 0.8%. Retailers fell 2.08%, banks shed 1.73%, financials gave up 1.57% and industrials eased 0.11%.
At 5.55pm, the Dow Jones industrial average was little changed while the FTSE 100 added 0.1% , France’s CAC 40 was off 0.28% and Germany’s DAX eased 0.11%.
Gold lost 0.73% to $1,989.48/oz, while platinum gained 0.73% to $1,052/oz. Brent crude rose 2.05% to $84.62 a barrel.
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