Rand falls after disappointing trade data, stocks rise

South Africa‘s rand weakened against the US dollar on Thursday after the country’s trade balance for the year so far swung to a deficit compared with a surplus last year, pointing to the fragility of the economic rebound.

Stocks rose, supported by technical factors after momentum indicators showed the market was near oversold levels. It was given a further shot by a global equities rally spurred by Chinese data and renewed efforts in Italy to form a government.

At 15:20 GMT, the rand traded at 12.6900 per dollar, 1.34% weaker than its close on Wednesday.

South Africa‘s revenue agency said the trade balance for January to April was a deficit of R17.65 billion ($1.39 billion), compared with a surplus of 8.52 billion for the comparable period in 2017.

The data ignited concerns that the economic growth outlook remained uncertain despite an uptick in sentiment.

“Net trade has been quite disappointing thus far in 2018 and will likely be a drag on first-quarter GDP,” said Elize Kruger, an economist at NKC African Economics.

“We forecast a wider current account deficit of 2.8% of GDP for 2018 compared to deficit of 2.3% of GDP in 2017.”

First-quarter GDP numbers are due for release on Tuesday. The economy expanded 3.1% in the last quarter of 2017.

In fixed income, the yield for the benchmark government bond due in 2026 rose 1.5 basis points to 8.555%, reflecting weaker prices.

On the bourse, the benchmark Top-40 index added 1.01% to 49,783 while the wider all-share index climbed 1% to 56,157.

Precious metals producer Sibanye-Stillwater added over 2% in the session after it said it was exploring debt-cutting options while ruling out tapping shareholders for funds. But just before the market closed it slipped into the red to end 0.13% lower.

Source: moneyweb.co.za