The rand marginally rose against the dollar on Monday after softer-than-expected US data raised investor hopes on possibility of a US Federal Reserve rate cut later this year.
By 12.21am, the rand was 1.26% stronger against the dollar, at R18.44.
“Risk appetite improved after Friday’s softer-than-expected US payroll data breathed life into bets that the US Fed could still cut interest rates this year,” Bianca Botes, a director at Citadel Global, said on Monday
She said sentiment towards China was steadily improving, as the Chinese government had moved to stabilise the country’s battered property sector. That was an added boon for emerging markets.
This week would see a slurry of interest rate decisions by central banks.
“Today, however, we will keep an eye on local Purchasing Managers’ Index (PMI), EU PMI and PPI (producer price index), and speak from Fed officials,” Botes said.
The rand started the week trading at R18.52 to the dollar, R19.94 against the euro and R23.24 against the pound.
The dollar index steadied above 105 on Monday as investors continued to assess the outlook for Federal Reserve monetary policy, while looking ahead to fresh central bank commentary this week, according to Trading Economics.
The JSE index was slightly up on Monday, trading above the 76 900 point level, in line with its global peers, according to Trading Economics.
Renewed hopes of rate cuts by the US Federal Reserve this year helped boost market sentiment. At the same time, traders continued to monitor economic indicators from major economies, including PMI surveys, alongside the ongoing earnings season. On the domestic front, the latest data showed South African private sector activity rose marginally in April.
Among individual stocks, Montauk Renewables and AngloGold Ashanti led the gains, rising 7.4% and 4.2%, respectively. Conversely, Redefine Properties saw its shares drop nearly 3%, after announcing the increase in distributable income in the first half by 6.1% to R1.7 billion and declaring a dividend of 20.27 cents per share for the six months to end-February
S&P Global South Africa PMI
The S&P Global South Africa PMI increased to 50.3 in April 2024, from 48.4 the previous month, indicating stabilisation in the country’s private sector, Trading Economics said.
Despite a decline in business activity due to subdued demand, the private sector saw a glimmer of hope with a milder decrease in new orders and a reduction in load shedding, enabling the firms to expand their output.
Moreover, firms took proactive steps to bolster their staffing levels and increase purchasing activity, encouraged by signs of demand improvement and optimistic expectations for the month ahead.
Although lead times continued to lengthen due to port congestion in Durban, the latest delays represented the mildest setback in nine months, hinting at potential improvements in supply chain efficiency. On the price front, input costs saw a moderated increase in April, though the pace of selling price inflation accelerated to a six-month high.
BUSINESS REPORT