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#RandReport: Markets weaker ahead of US Fed rate decision

At 1308 GMT, the rand weakened 0.38% to 13.1800 from its overnight New York close, trading at 13.1300 against the dollar.

Picture: EWN.

JOHANNESBURG - The rand and stocks weakened on Tuesday ahead of a US Federal Reserve policy decision and concerns by S&P Global Ratings over the domestic economy, which saw investors repositioning their bets.

At 1308 GMT, the rand weakened 0.38% to 13.1800 from its overnight New York close, trading at 13.1300 against the dollar.

A Fed rate rise on Wednesday is seen as all but certain and investors will focus on new economic forecasts and any clues as to how many rate hikes can be expected this year.

"We'll probably see a knee jerk reaction once the announcement is they're going to hike rates, I think the rand is going to slightly weaken on that," said TreasuryOne currency dealer Andre Botha.

Investors also fretted over S&P Global Ratings' concerns about weak domestic economic growth and political tensions in Africa's most industrialised economy, which faces the prospect of downgrades to its sovereign credit ratings which would raise the cost of borrowing.

The manufacturing print for January also came in weaker than expected, casting a cloud over the economy.

"Clearly South Africa's manufacturing sector is still struggling to gain any meaningful traction," said Stanlib chief economist Kevin Lings in a note.

In fixed income, government bonds also weakened, with yield on 2026 benchmark up 4 basis points to 8.700%.
On the equities market, the All-Share Index fell 0.3% to 51,699 points, while the blue-chip Top-40 Index shed 0.43% to 44,652 points.

BP Bernstein trader Vasili Tirasis said investors were awaiting the Fed's rate call before they "can take positions going forward."

Leading the Top-40 decliners, Bid Corporation weakened 3.38% to R263.60, and Mobile operator MTN declined 2.39% at R122.10.

Bucking the trend, gold stocks shined as bullion prices recovered, with the gold index. up 2.47%.

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