External forces put pressure on the rand

THE rand eased amid external stumbling blocks in the form of weak data out of China and caution ahead of the release of the minutes of the US Federal Open Market Committee (FOMC) meeting in July, according to NKC Research.

In terms of the July minutes, as well as the upcoming Jackson Hole Symposium, NKC Research said it expected to see further guidance on a gradual policy pivot towards less extreme monetary accommodation.

Another external factor that might weigh on the rand was the sharp deceleration in Chinese growth momentum, as infrastructure investment slowed, while consumption was hit amid supply-chain disruptions because of flooding and renewed Covid-19 restrictions.

Among domestic factors, the confirmation on Friday by new Finance Minister Enoch Godongwana that the fiscal ship would be steered with a consolidation-minded hand was received as good news.

At the close of local trade, the rand was 0.04 percent weaker against the dollar, at R14.76, after trading in narrow range of R14.70 to R14.80. The rand lost ground overnight. The expected range of the rand against the dollar today is R14.70 to R15.

JSE

The FTSE/JSE All Share Index closed 0.8 percent lower yesterday, with technology shares losing the most ground (-7.1 percent). Sasol posted a headline profit of R24.5 billion for the year to the end of June, but the uncertainty of the current macroeconomic environment was cited as the reason for not declaring a dividend. Sasol’s share price fell by almost 5 percent yesterday. In the overall emerging market sphere, the MSCI Emerging Market Index traded -0.7 percent lower.

Brent crude oil

The Brent oil price traded lower yesterday after data showed a decline in refining throughput and economic activity in China. Flooding and new outbreaks of Covid-19 disrupted business activity, and saw retail sales growth and factory output come in below expectations. At the close of local trade, benchmark Brent crude futures were 1.1 percent lower at $68.9 per barrel. Crude prices ticked lower during Asian trade this morning.

BUSINESS REPORT ONLINE