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#RandReport: Rand weakens on subdued risk sentiment; stocks tumble

At 1517 GMT, the rand was 0.77% weaker at 14.1425 to the dollar, compared to a close of 14.0350 in New York.

Picture: Supplied.

JOHANNESBURG - The rand weakened on Tuesday in line with some other emerging market currencies as a dollar rally, trade tensions and US Federal Reserve comments on global growth dimmed investor appetite for riskier assets.

Stocks fell in tandem with global markets, led by Naspers , on the back of a sell-off in technology stocks.

At 1517 GMT, the rand was 0.77% weaker at 14.1425 to the dollar, compared to a close of 14.0350 in New York.

“The rand is treading water and waiting for direction, which will be provided by some important economic events later in the week,” said ETM economist Halen Bothma.

The market largely expects the Reserve Bank (SARB) to hold lending rates steady at its final meeting of 2018 on Thursday. In a Reuters poll conducted last week, 16 of 26 economists said the SARB would keep its repo rate at 6.50% while the rest forecast a 25 basis point hike.

The rand may be at risk of a downgrade in a sovereign rating review by S&P due on Friday, due to concerns about the postponement of fiscal consolidation and a lack of clarity around land expropriation, a senior S&P Global Ratings analyst said 30 October.

Persistent worries about the China-US trade conflict and cautious comments overnight by Federal Reserve officials about the global economic outlook kept investors jittery.

“The rand has given up ground as the dollar rebounds but it’s not a material risk-off environment,” said Bothma.

Bonds were slightly weaker, with the yield on the benchmark 2026 government bond up 0.5 basis points to 9.135%.

In equities, the Top 40 index slumped 2.91% to 44,844 points while the All Share index fell 2.59% to 51,068 points.

Media and e-commerce giant Naspers fell 7.35% to R2,617 as worries over softening demand for the iPhone triggered a sell-off by tech stocks around the world, raising further worries about a slowdown in the global economy.

“It is obviously the technology sell-off that is happening in the US and the lingering trade war concerns. All emerging markets have been hit pretty hard and that is coupled with the fact that the global growth rate is slowing down,” said Wayne McCurrie, FNB Wealth and Investments portfolio manager.

Naspers said on Monday it expected half-year core headline earnings per share to be between 35% and 43% higher than a year earlier.

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