Rand stronger on sell-off retreat, stocks falter

South Africa‘s rand regained as much as 2% on Thursday after an easing in the sell-off on emerging markets stemming from fears of a trade war between the United States and China.

At 15:30 GMT the rand traded at 13.28 to the dollar, strengthening 2% and recouping from the previous session’s losses.

The rand retreated more than 1% on Wednesday as fears of a trade war between the United States and China hit global demand for emerging market currencies.

“We have seen emerging markets generally selling off in the wake of all of these tariff war rumours. Today it is a bit of a reverse. People just think the sell off has been overdone,” said trader at 36ONE asset management Wessel Badenhorst.

South Africa‘s manufacturing data released on Thursday, which was better than expected, offered some relief to fears the economy would slip into a recession.

Manufacturing output rose again in May after a disappointing first quarter as production of motor vehicles and durable consumer goods increased, offering hope the economy will avoid slipping into recession.

May manufacturing output expanded 2.3% year-on-year in May and was up 1.5% on a monthly basis.

Bonds also firmed, with the yield on the benchmark bond due in 2026 down 2.5 basis points to 8.70%.

Shares fell for a third straight session, with gold producers stumbling on the resurgent rand, which hits margins as their costs are largely priced in the local currency. Mining data for May also showed a sharp contraction in gold production.

Sibanye-Stillwater closed 4.48% lower to 7.68 while by Harmony Gold fell 2.12% to R22.20. Overall, the benchmark Top-40 index closed 0.73% lower to 50 672 points while the broader All-Share index lost 0.67% to 56 849 points.