Rand bounces back from record low

Emerging market stocks and currencies extended gains on Tuesday as the continued tapering of the coronavirus’ toll in certain European and U.S. hotspots led many to cautiously believe the pandemic may have peaked.

The rand was among the best-performing currencies on Tuesday, adding about 1.9% as it bounced back from a record low touched on Monday.

By 11:46 the rand was 1.84% stronger against the dollar, at 18.32, 0.97% up against the pound at 22.51 and up 1.19% against the euro, at 19.91.

The pandemic has only added to concerns over South Africa’s economy, which had logged shrinking economic growth even before the outbreak.

The JSE All Share was up 3.45% and the JSE Top 40 up 3.1% at 11:31.

MSCI’s index of developing world stocks added about 2%, while the currencies index firmed about 0.5% as the rates of new infections in several U.S. states appeared to be slowing, while the rate of new deaths in Spain also fell.

Still, analysts maintained a cautious stance as global Covid-19 cases continued to rise, with the outbreak’s economic shock set to send the global economy into a deep recession.

“We believe it is too early to definitively call for a turn in the pandemic, and investors should continue to expect heightened volatility,” said Mark Haefele, chief investment officer, UBS Global Wealth Management.

“The market action in the last 24 hours provides further indications that markets may be normalising after a period of heightened anxiety. But the situation remains highly fluid.”

Chinese stocks also rose after Beijing unveiled more stimulus measures last week to dampen the economic shock from the outbreak.

Russia’s rouble strengthened, while stocks in the country also gained on a rise in oil prices, amid hopes of further production cuts as the coronavirus wreaks havoc on crude demand.

Turkey’s lira firmed about 0.9%, but was still around levels last seen in the aftermath of a debt and currency crisis in 2018. Turkish stocks firmed 2.4%.

The currencies of Hungary, Poland and Sweden all firmed between 0.7% and 1.2% to the dollar.