#RandReport: Stocks hit by oil slump, rand weakens

Growing concerns about global oversupply drove US crude prices to their lowest since 2003.

Picture: EWN.

JOHANNESBURG - South African stocks fell to a one year low on Wednesday, as emerging markets were once again at the centre of another global rout after a tumble in oil prices, while the rand also weakened.

Growing concerns about global oversupply drove US crude prices to their lowest since 2003, hurting demand for riskier assets and boosting safe havens.

The latest slump in oil sent the blue-chip Top-40 index down 2.94 percent to 41,610.78, while the wider All-share index fell 2.73 percent to 46,326.78 points.

While low oil prices are beneficial for South Africa as the commodity is the country's biggest import, global risk aversion outweighed the benefit.

"Commodities are all getting a kicking again - gold excepted. Oil continues to grind its way lower," said Standard Bank trader Warrick Butler. "It seems we are back to the same old sentiment that has plagued markets this year."

Shares in the Johannesburg mining giant BHP Billiton fell 7.08 percent to 138.06 rand after the London based flagged that it sees no recovery in iron ore or coal prices in the next few years.

Its peer Anglo American plunged 7.50 percent to 53.30 rand on the news that it has agreed to sell its Callide thermal coal mine in Australia.

Gold stocks gained some ground with Harmony Gold up 4.19 percent to 28.60 rand and AngloGold Ashanti jumped 5.04 percent to 133.28 rand.

On the forex market, the rand weakened as bears mauled currencies in global risk aversion, while inflation data also heaped misery on the rand.

South Africa's retail sales grew more than expected while consumer inflation also accelerated, data showed, pointing to a likely interest rate hike next week.

The South African Reserve Bank raised its benchmark lending rate by 50 basis points last year, and some analysts expect another increase on 28 January, as a sharply weaker rand and rising food prices due to drought, fuel inflation.

"Local economic conditions remain weak. Despite this, we anticipate that the Monetary Policy Committee will remain focused on the upside risks to inflation, especially with the rand hitting all-time lows," analysts at Nedbank said in a note.

By 1542 GMT the rand had weakened 0.45 percent to 16.8500 per dollar, surrendering the previous day's gains.

In fixed income, yields on government bonds were mixed, with the benchmark paper due in 2026 unchanged to 9.705 percent.