Rand hits 3-week peak, stocks led higher by commodities

South Africa‘s rand powered to its firmest in three weeks on Monday as risk demand globally was soothed by a sliding dollar, while the bourse ended higher with the stronger currency lifting commodity stocks.

At 15:00 GMT the rand was 0.76% firmer at 13.3550, its strongest since June 14, having closed beneath the crucial 13.50 level in the previous week after US jobs data on Friday showed a slower-than-expected growth in wages.

The greenback’s retreat and the rand’s technical test of long-term moving averages near 13.30 prompted some short- covering by investors looking to cash in before the dollar resumed its forward march.

The dollar index on Monday had slipped to its weakest in three weeks.

Momentum indicators also showed the local currency had strayed into oversold territory.

Analysts said the next move would be determined by developments in the brewing US-China trade dispute, with short plays dominating as investors looked to cautiously recoup losses from an emerging market rout that lasted nearly two months.

“For the rand to strengthen to below 13.00 on a sustainable basis, a meaningful change in investor sentiment and the global outlook would be required, i.e. dissipation of global trade wars, halting of interest rate hikes by the US Federal Reserve,” said analysts at Nedbank Mehul Daya in a note.

“In our view, this is an unlikely scenario,” Daya said.

Bonds tracked the firmer currency, with the yield on the benchmark bond due in 2026 down 3.5 basis points at 8.635%. 

The Johannesburg Top-40 index was up 1.7% to 51 992 points, while the broader All-Share index rose 1.58% to 58 219 points.

Bourse heavyweight Naspers closed 2.08% higher, lifting the market with it.

Platinum miners were among the biggest advancers as the spot price rose 1.2% to its highest since June 27.

Anglo American Platinum gained 3.37% to R370.45, followed by Impala Platinum which rose 2.7% to R21.74.

BHP Billiton gained 1.41% to R302.54, aided by a rebound in copper prices and by talk that BHP could sell its US shale assets to BP BP.L for over $10 billion.