The JSE closed weaker amid mixed global peers on Tuesday, while the rand extended the previous session’s losses as investors awaited fresh developments on the local political front.
Despite the rand’s losses, it has retained its position as the world’s best-performing major currency in June, gaining over 3% so far, said TreasuryOne currency strategist Andre Cilliers.
Investors are awaiting an announcement from President Cyril Ramaphosa about his cabinet ministers under the government of national unity (GNU). Business Day understands that negotiations with other political parties that have joined the GNU are ongoing, with the ANC having said the president will make an announcement in the coming days.
“The rand’s weakness followed investor anticipation regarding President Ramaphosa’s announcement of a new cabinet formed through a coalition with opposition parties,” Cilliers said. “The market is closely watching for cabinet appointments that could potentially spur demand for SA assets.”
RMB analysts added that “with no clear guidance on a definitive date for the expected announcement of the new cabinet, we expect rand volatility to remain elevated”.
At 5.20pm, the rand had weakened 0.81% to R18.2629/$, 0.58% to R19.5372/€ and 0.28% to R23.0255/£. The euro was 0.23% weaker at $1.0708.
Globally, investors continued to watch data for insights on the future path of inflation and the US Federal Reserve’s interest rates. They were anticipating comments from Fed officials, with governor Michelle Bowman and governor Lisa Cook expected to speak later on Tuesday.
Fed San Francisco president Mary Daly, a voting member of the federal open market committee, noted on Monday that despite recent relief in inflation figures, the Fed would have no choice but to keep policy rates pinned higher for longer if price growth didn’t continue cooling to the 2% target range, reported Bloomberg.
Investors are also looking ahead to the release of May’s personal consumption expenditure data, the Fed’s preferred inflation gauge, on Friday. Markets are hoping the index will show some signs of moderation in US inflation, which will support the case for potential monetary easing.
The JSE all share lost 0.85% to 79.577 points and the top 40 retreated 0.83%.
At 5.55pm, the Dow Jones industrial average was 0.68% weaker at 39,230 points and the S&P 500 added 0.29%. In Europe, the FTSE 100 lost 0.41%, France’s CAC 0.58% and Germany’s DAX 0.89%.
In the commodities market, gold lost 0.26% to $2,324.95/oz and platinum 0.86% to $992/oz. Brent crude was 0.7% weaker at $85.41 a barrel.
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