Rand steady in late trade, stocks slip

South Africa‘s rand steadied in late afternoon trade on Tuesday, recovering from losses earlier in the session as developing world currencies weakened on fears the protracted China-US trade conflict may have already begun to impact Asian economies.

On the bourse, equities slipped slightly with financial stocks and retailers leading the decline.

At 1517 GMT the rand 14.39 per dollar, unchanged from an overnight close in New York. The unit had weakened to a session low of 14.49 earlier on trade conflict concerns.

“Investors were previously hoping that the doors would be closed firmly shut on trade dispute by the end of this month,” Jameel Ahmad, global head of currency strategy & market research at FXTM, said in a note.

“But the recent tariff escalations from both sides suggest that emerging market currencies will continue to find themselves exposed to external uncertainties into the second half of 2019 at least.”

Data showed economic growth in Singapore was its lowest in nearly a decade in the first quarter, while in Thailand it was at its lowest in four years, raising worries that major Asian economies will be hurt by global trade tensions.

Upcoming South Africa consumer inflation data and a central bank decision on lending rates also capped any large bets.

A Reuters poll of economists and analysts conducted last week forecast the central bank will leave interest rates unchanged at 6.75%, with inflation expected to remain within the Reserve Bank’s 3-6% target range.

Statistics South Africa publishes April consumer figures on Wednesday at 0800 GMT.

In fixed income, the benchmark government bond dipped 3 basis points to 8.47%.

The broader All-Share index fell 0.17% to 55,524 points, while the blue chip stocks on the Top-40 index declined 0.13% to 49,486 points.

Banking stocks slipped 2.01% to R9408.23m with Nedbank falling the farthest to R256.35 – a 3.26% decline, followed by Absa which shed 2.87% to R164.20. Insurer Discovery fell 2.77% to R139.66, and Standard Bank declined 2.170% to R192.95.

“There’s now growing realisation that the first quarter GDP number is going to be particularly poor, and a weak economy is not good for the banking or retail shares,” said FNB Portfolio Manager Wayne McCurrie.