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#RandReport: Rand firms after GDP data, stocks weak

At 1500 GMT, the rand was 0.42% firmer at 14.1400 per dollar, compared to its close of 14.2000 on Monday.

Picture: EWN.

JOHANNESBURG - The rand firmed on Tuesday after data showing an economic recovery from a recession continued in the fourth quarter of last year, albeit at a slower rate.

Stocks weakened as the GDP figure was below market expectation.

At 1500 GMT, the rand was 0.42% firmer at 14.1400 per dollar, compared to its close of 14.2000 on Monday.

South Africa suffered a recession in the first half of 2018 as farming plunged after a drought, but growth has since recovered.

The economy grew 1.4% in October-December 2018, after expanding by a revised 2.6% in the third quarter, Statistics South Africa said.

“Q4’s growth outcome signalled that the South African economy has muddled along, very slowly on the mend,” said Elize Kruger, an economist at NKC African Economics.

“Clearly the economy is nowhere close to being out of the woods yet, with sporadic load shedding, higher fuel prices, a higher tax burden and a moderating global economy weighing on much-needed improvements in confidence levels,” she added.

The Treasury has projected that the economy will grow 1.5% this year. But risks such as electricity supply shortages remain after struggling power utility Eskom resumed nationwide electricity cuts late in February.

Bonds firmed, with the yield on the benchmark paper due in 2026 dipping 6 basis points to 8.665%.

In equities, the local market shrugged off the GDP data as it opened in the green before losing all its steam at 0730 GMT and drifting lower for the rest of the trading session, with the Johannesburg All-share index closing 0.71% lower at 55,815 points.

The Top-40 index closed 0.62% weaker at 49,585 points.

“The GDP data we had out earlier was probably a little bit disappointing,” said Cratos Capital equities trader Greg Davies.

Refinitiv’s consensus forecast was for growth of 1.6% quarter-on-quarter.

Davies also blamed market heavyweight Naspers for the weakness after it gave away its earlier gains.

“A share like Naspers, which was positive this morning, has pulled all the way back in the last hour of trade. It started with Naspers pulling us down and it pulled more and more sellers into the market,” Davies added.

Naspers closed 0.06% weaker at R3,155 after rising more than 3% earlier.

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