MARKET WRAP: Improved risk sentiment pushes rand to best level since 2019
The rand broke below R13.90/$ for the first time since July 2019 as optimism surrounding the global economic outlook brightened, raising risk sentiment.
The rand gained for a second day on Friday, as better-than-expected economic data from the eurozone boosted risk-on trade.
“Risk-on trade is gaining momentum, with emerging-market assets coming into favour,” said Chantal Marx, head of investment research at FNB Wealth and Investments.
At 6.05pm, the rand had strengthened 0.16% to R13.9455/$, 0.55% to R16.9823/€ and 0.43% to R19.7428/£. The euro was 0.44% weaker at $1.2174. The local currency reached an intraday best level of R13.88/$, its firmest in 22 months.
The rand ended a volatile week with gains of 1.7% to the dollar, pushing its 2021 rise so far to about 5.3%.
Bonds firmed along with the currency, with the yield on the R2030 government bond falling six basis points to 8.99%. Bond yields move inversely to their prices.
The JSE tracked firmer European stocks as market cheered the improved economic data.
The JSE all share gained 0.17% to 66,238 points and the top 40 0.24%. Banks added 0.98%, financials 0.95% and industrials 0.6%. Precious metals fell 1.49%, listed property 1.21% and resources 0.58%.
Industrial metals, resources and listed property were the biggest losers this week, down 4.7%, 3.27% and 2.32%, respectively, while banks and financials gained the most, up 1.43% and 1.12%, respectively.
A rebound in services helped push the May purchasing managers index (PMI) for the euro area to 56.9, while in the UK PMIs reached the highest level since the survey began in 1998 and retail sales surged.
“Most bourses are moving broadly higher, extending strong gains from the previous session as optimism around economic outlook continues to pick up,” said Oanda market analyst Sophie Griffiths.
“Covid cases in Europe are declining, lockdown restrictions are easing and economic data is strengthening. There’s a lot to like about Europe’s position at the moment. The region appears to be mounting a powerful rebound from its technical recession,” said Griffiths.
At 5.30pm, the Dow Jones Industrial Average was 0.51% firmer at 34,338.91 points. In Europe, the FTSE 100 was little changed, while France’s CAC 40 had gained 0.68% and Germany’s DAX 30 0.44%.
Gold was 0.18% weaker at $1,872.63/oz and platinum lost 2.13% to $1,170.41/oz. Brent crude rose 2.55% to $66.70 a barrel.
“Oil prices are edging higher on Friday, picking up from a monthly low after a steep sell-off across the week,” said Griffiths.
Source: businesslive.co.za
