The JSE closed lower and the rand gave back the previous session’s gains on Friday as it weakened along with other emerging market currencies. The dollar firmed as investors evaluated the likely impact on the American economy of Tuesday’s election of Donald Trump as US president.
The local currency, which surged 2.1% on Thursday, pulled as the dollar regained its footing.
“This shift is more of a technical correction, a natural rebound after the rand’s recent surge,” said Andre Cilliers, currency strategist at TreasuryONE.
At 6.27pm, the rand had weakened 1.53% to R17.5637/$, 0.84% to R18.8391/€ and 1.07% to R22.6942/£. The euro was 0.7% weaker at $1.0728.
Cilliers said markets are also reacting to speculation of the possible effects of higher tariffs on the SA economy under Trump’s administration.
Trump’s victory has brought concerns about his “America First” policies, which historically have led to increased trade tension and volatility in emerging markets, including SA. These concerns have sparked fears about the effect on SA’s export dynamics, potentially dampening investor sentiment and leading to reduced foreign investment and higher import costs.
Cilliers said the temporary closure of the Lebombo border post between SA and Mozambique is weighing on sentiment, mostly impacting the local stock market.
SA closed one of its busiest border crossings with Mozambique this week after violent post-electoral protests in its neighbouring country.
The protests have led to deadly clashes in several cities after last month’s disputed presidential election, won by Mozambique’s ruling Frelimo party.
The JSE all share index lost 1.02% to 85,124.52 points, pulled lower by metals, while the top 40 closed down 1.17%.
For the week, the all share index is down 1.25%, with precious metals, resources and industrial metals falling the most, down 4.38%, 3.22% and 2.16% respectively.
Cilliers said the path forward remains closely tied to how Trump’s administration executes proposed policies and their impact on global markets.
“For SA, though quite volatile at the moment, the rand’s resilience is a positive sign. But economic fundamentals — such as resolving municipal and SOE challenges — will be key to sustaining momentum,” said Cilliers.
“The Fed’s policy stance, alongside any fiscal changes in the US, will continue to play a pivotal role in shaping global economic conditions.”
On the commodities markets, gold lost 0.68% to $2,687.60/oz as the metal was poised for its steepest weekly decline in over five months, pressured by a stronger dollar, according to Reuters. Platinum was 2.25% lower at $972.65/oz.
Brent crude was 2.74% weaker at $73.46 a barrel.
At 6.50pm on Friday the Dow Jones industrial average was up 0.7%, while the S&P 500 was 0.4% higher.
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