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#RandReport: Rand recovers after power cuts fallout, stocks rise

At 1657 GMT, the rand was 0.36% firmer at 13.7550 per dollar, compared to its close of 13.8050 the previous day.

Picture: Supplied.

JOHANNESBURG - The rand firmed on Tuesday, supported by rising risk appetite globally and recovering from a sharp selloff in the previous session when it was hit by a sudden escalation of controlled power cuts in South Africa.

At 1657 GMT, the rand was 0.36% firmer at 13.7550 per dollar, compared to its close of 13.8050 the previous day.

The rand tumbled nearly 2.5% on Monday to its weakest in nearly three weeks as ailing power company Eskom cut 4,000 megawatts from the national grid after seven generating units unexpectedly went offline.

The power crisis persisted on Tuesday, exposing the frailty of state-owned Eskom despite government promises to revive the utility.

“The reality of developments this week regarding Eskom and its ability to keep the lights on is that it matters not whether the first, but not last, failure of this magnitude was deliberate or the consequence of cumulative neglect, incompetence and lack of expertise,” said Gary van Staden, an analyst at NKC African Economics.

“The consequence either way for the economy is severe and the best-laid plans of politicians and policymakers will fail if the power grid does too,” he said.

The yield on the benchmark 10-year South African government bond rose by one basis point to 8.79%.
In the equities market retailer and wholesaler, SPAR Group Ltd topped the Top-40 blue-chip index after reporting a 8.2% increase in 17-week sales.

The grocery and building materials retailer closed 5%higher at R199.78.

SPAR lifted sentiment in other retailers as well, such as grocery retailer Pick n Pay and supermarket chain owner Shoprite, which gained 4.09% and 2.69% respectively.

Recent sales updates from retailers have been a mix bag, with the majority of them on the downside as financially strained consumers spent less on food and clothes.

Gold stocks were also on the rise after bullion rose, supported by a slight pause in the dollar’s rally as the United States and China continue talks aimed at ending their trade conflict.

The gold index jumped 1.9%.

Harmony Gold was also supported by a robust first-half operating performance. It rose 2.08% to R29.88.

Bucking the upward trend, EOH Holdings plunged 25.87% to R19.80, a level last seen in April 2011 after it said Microsoft has given notice to terminate its channel partner agreement with its subsidiary.

The Johannesburg all-share index closed 1.03% higher at 53,960 points, while the top-40 index rose 1.23% to 47,807 points.

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