Profit-taking pauses rally in rand, stocks

South Africa’s rand was largely flat on Thursday, pausing from a recent rally as investors took profits and awaited further signs of a global economic recovery.

At 17:30, the rand traded at R16.94 per dollar, 0.04% weaker than its close on Wednesday, when it climbed to an 11-week peak of R16.89.

Governments around the world have gradually started to lift tough lockdown measures imposed to contain the coronavirus which has infected more than 6.43 million people globally and killed over 380 000.

In South Africa, the government on Monday partially lifted a lockdown that has battered the economy which was already in recession before the coronavirus crisis, allowing mines and factories to run at full capacity.

Traders kept mostly on the sidelines awaiting the widely watched US unemployment figures due on Friday.

“The rand has continued to post gains over the most recent sessions, having extended these to a recent best level of R16.89,” said analysts at Nedbank in a note.

“Crucially, it has thus far consolidated these gains to hold steady sub the R17 level. There will be much focus on the US NFP [non-farm payroll] data tomorrow, but the technical indicators for the local unit suggest the potential for additional gains.”

In fixed income, the yield on the 10-year government bond due in 2030 was up 7.5 basis points to 8.74%.

Stocks also paused on Thursday after hitting a more than three-month high in the last session, as investors locked in profits from recent strong gains in banks and shopping mall owners.

The Johannesburg All Share index fell 0.74% to 53 250 points, while the Blue-Chip Top 40 Index closed 0.83% lower to 48 891 points.

Banks also gave their previous session’s gains back, declining 1.1%.

“Today it’s just a case of taking some profits,” Independent Securities trader Ryan Woods said. “There was no real reason other than one would have to say it was probably sector rotation.”

South African lender FirstRand said on Thursday its full-year profits were likely to be more than 20% lower than in 2019 due to falling revenues and a spike in bad debts, pushing its shares down 2.69%

Overall, global stock markets have been moving higher since hitting a low in mid-March as countries implemented coronavirus lockdowns. With the majority of countries lifting the restrictions, investors have been cheering signs of a global economic recovery as businesses begin to reopen.

The All-Share index has jumped more than 40% since a low of 37 963 points hit in March 19.