MARKET WRAP: Rand biggest gainer among emerging markets

The rand was the biggest gainer among the emerging-market currencies on Friday after weaker-than-expected US wage growth fueled speculation that the US Federal Reserve is unlikely to raise interest rates any time soon.

The fall in the dollar came despite data showing that the world’s largest economy added 263,000 non-farm jobs in April, exceeding the Trading Economics consensus for 189,000. Traders, however, appeared to be more focused on the monthly wage growth of 0.2% compared to the expected 0.3%, implying that inflation will remain under control.

Higher inflation in the US usually leads to investors betting on higher interest rates, which draws capital from other markets back to dollar-denominated assets.

Friday’s data came after the Fed’s open market committee released a dovish statement on Wednesday.

Gains in the rand came in ahead of the Argentinean peso and the Brazilian real, and by 6pm it had improved 1.22% against the dollar to R14.3615.

“Any signs of wage growth cooling could rekindle speculation over the Fed cutting interest rates — something that will punish the dollar,” research analyst at FXTM Lukman Otunuga, said.

The rand was also 0.4% stronger against the pound at R18.8742 and 0.4% firmer against the euro at R16.072. It ended the week flat against the dollar, after weakening on Wednesday and Thursday.

The JSE also had a good day on Friday, with the all share rising 1.01% to 59,335.9 points. Platinum miners led the gains, followed by banks, adding 4.01% and 2.02%, respectively.

Anglo American Platinum went up 3% to R733.34, Northam 5.63% to R60, Impala 4.57% to R59.27, and Lonmin 4.84% to R12.78.

The top 40 climbed 1.02%.

Standard Bank added 2.63% to R206.77, Absa 2.58% to R173  Nedbank 2.31%% to R278.79, Capitec 2.27% to R1,356.23 and FirstRand 1.27% to R69.37.

Food and drug retailers rose by 1.71% with Shoprite leading the gains, adding 3.02% to R180.04. Pick n Pay was up 1.69% to R70.35, Dis-Chem 1.49% to R27.30, Spar 0.94% to R196, and Clicks 1.27% to R201.27.

Intu Properties’ share price plunged 6.05% to R17.85, after it said earlier on Friday that its like-for-like rental income would drop by 6.% in 2019, due to the low level of lettings and the renegotiation of leases with financially distressed businesses.

MTN added 1.74% to R105.30 after it said former deputy finance minister Mcebisi Jonas will take over as chair when Phuthuma Nhleko steps down in December. Nhleko, who served as its CEO from 2002 to 2011, will step down on December 15 “after overseeing an orderly transition of the board, including the establishment of [an] international advisory board”.

Commodity prices rose on the weaker dollar, with Brent crude adding 1.25% to $71.26 a barrel. Gold rose 0.79% to $1,280.67/oz and platinum 2.05% to $867.25.

Next Thursday sees the release of local mining and manufacturing data. A Bloomberg consensus expects a slight improvement in mining, from the 7.5% year-on-year contraction recorded in February, to a fall of 5.2% in March.

Growth in the manufacturing sector is estimated to drop to 0.1% year-on year, from 0.6% previously.

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