Rand weakens on coronavirus rebound fears

South Africa’s rand fell on Friday and ended lower on the week as fears about a resurgence of coronavirus infections hurt sentiment toward the emerging markets.

The stock market, however, was upbeat, bucking a largely declining trend on positive factory output data from China.

At 17:15 the rand was 0.64% weaker at 18.5750 per dollar in a low-volume trading session dominated by offshore events as investors weighed the likelihood of a global economic rebound.

New infections in Germany and other countries that have eased their lockdown restrictions dented earlier investor optimism that economies could get back to close to normal soon.

Risk sentiment was further dampened by a flare-up of trade tensions between China and the United States, with U.S. President Donald Trump saying on Thursday he was disappointed with China’s failure to contain the coronavirus, suggesting he could cut ties Beijing.

Bonds at long end of the curve saw their yields rise, while short-end yields fell, continuing a recent divergence fuelled by bets of a sharp drop in lending rates and higher issuance in coming months before a reversion as conditions normalise.

The Johannesburg Stock Exchange benchmark FTSE/JSE all share index rose 1.05% to end the week at 49,629. The FTSE/JSE top 40 companies’ index rose 1.11% to 45,948.

Sentiment rose after the first rise in China’s factory output number after it eased the lockdown in the country.

However, much of the optimism was offset by fear of a flare up in Sino-U.S. trade relations.

China is South Africa’s biggest trade partner.

The yield on the government issue due in 2026 fell 9 basis points to 7.80%, while the 2037, 2044 and 2048 bonds all saw yields climb between 15 and 20 basis points.