MARKET WRAP: Rand firmer despite employment numbers

The rand strengthened on Tuesday despite figures showing that the unemployment situation in the country worsened in the first quarter of the year.

The unemployment rate in SA rose 0.5 percentage points to 27.6% in the first three months of 2019, with the economy losing a net 176,000 jobs during the period, the Quarterly Labour Force Survey showed. This leaves a staggering 6.2-million people in the country actively looking for work.

The gains in the rand, however, came more as a result of international factors as most emerging-market currencies gained due to the escalating trade war between the US and China.

On Monday, China retaliated to US President Donald Trump’s latest round of tariff increases by instituting some of its own, on $60bn worth of US imports.

Shortly before 6pm, the rand had gained 0.75% to R14.2279/$, 0.9% to R15.94/€ and 1.02% to R18.3864/£. The euro was a little weaker at $1.1209. 

The JSE ended the day slightly lower despite gains in US and European markets, after Trump and Chinese officials tried to allay fears of their conflict escalating further. Prior to these comments, Asian markets took a bit of a beating, with Hong Kong’s Hang Seng falling 1.5%.

The JSE all share lost 0.25% on the day to 56,234.3 points with property suffering the most with a fall of 1.11%, followed by general retailers, which relinquished 1.1%. The bulk of the latter’s losses came from a 4.92% slump in Pepkor to R18.35. The company is being severely affected by its association with Steinhoff, which still owns more than 70% of its stock.

Steinhoff is embroiled in a number of lawsuits resulting from the collapse of its share price late in 2017 after it reported “accounting irregularities”. The company has been accused of fraudulently boosting profits and asset values for several years before the collapse, with former CEO Markus Jooste resigning on the day the allegations came to light.

Vodacom gained 1.33% to R116.50. Earlier, it announced the acquisition of a 51% stake in IoT.nxt, to accelerate its Internet of Things (IoT) strategy.

Investec Property Fund fell 1.83% to R15.59 despite it increasing its full-year payout to investors by 5.1% on a normalised basis, thanks to a strong showing from its European logistics portfolio.

Rebosis Property Fund regained 6.3% to R1.15 after a more-than 9% loss on Monday. It said earlier on Tuesday that it would not pay an interim dividend after reporting a R2bn loss for the six months to end-February as it wrote down the value of its investment in UK landlord New Frontier Properties.

Wednesday sees the release of local retail sales data for March, with most economists expecting growth to have softened marginally from 1.1% year-on-year in February on weak domestic demand, slightly higher inflation and constrained wage growth.

Despite remaining at near two-month lows, the Dow was last seen up 1.24% to 25,635 points, while the UK’s FTSE 100 had gained 1.09%, France’s CAC 40 1.5% and Germany’s DAX 30 0.97%.

Gold was down 0.4% to $1,2947.81/oz, while platinum had gained 0.19% to $855.89. Brent crude was 1.97% higher at $71.32 a barrel.

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