Rand jumps as Chinese data fuels recovery hopes, Anglo leads

The rand jumped on Thursday as weak business confidence data was outweighed by big surprise move up in China’s April exports that also helped its commodity currency peers.

At 1600 GMT the rand was 1.09% stronger against the dollar at R18.51.

The market mood stabilised globally as Beijing reported a 3.5% rise in April exports, confounding market expectations of a sharp fall, as factories restarted output after the coronavirus pandemic, raising hopes of an economic recovery.

Investec economist Annabel Bishop said in a note that the small bounce back of commodity currencies like the rand has so far been driven by some improving market sentiment, with further strengthening likely this year.

“Commodity currencies have seen some stabilisation after March’s collapse, but they are still weak as commodity prices remain relatively suppressed. However, May could see some further improvement, and likely June into quarter three of 2020,” she said.

Stocks climbed to a one-week high, pulled up by miner Anglo American and the unexpected rise in Chinese exports.

The Johannesburg-listed diversified miner rose 4.15% alongside its London-listed parent firm, providing the biggest boost to the Top 40 index, after Credit Suisse upgraded it to “outperform” from “neutral”, and raised its price target to 1,800p from 1,650p.

The firm also pleased investors worried about miners’ exposure to fossil fuel after it said on Thursday it preferred unbundling and listing its thermal coal operations in South Africa in the next two to three years over other options for exiting the business.

Its shares helped the mining index rise 0.89%, while peers Exxaro Resources and BHP Group gained 2.36% and 1.13% respectively.

Other notable gainers were industrial engineering firms , up 1.29%.

“For the most part we’ve been buoyed by fairly positive sentiment right through the market. Industrials are starting to show signs of life and that had to do with lockdown restrictions starting to ease a little bit,” Independent Securities trader Ryan Woods said.

“Investors are starting to see a little light at the end of the tunnel, both locally and offshore, although it’s going to take some time, but at least it’s not dark as it looked before.”

South Africa’s stock indexes have rebounded sharply from a coronavirus-fuelled selloff in March, powered by monetary and fiscal stimulus and, more recently, the reopening of businesses following a nationwide five-week lockdown.

The Johannesburg All-Share index rose 0.38%, while the Top 40 index closed 0.31% firmer.

Bonds continued to rally, with the yield on the government issue due in 2030 down 2.5 basis points to 9.420%.