Markets inch higher as the Rand Weakens after Public Protector recommendation

The JSE closed firmer today, taking a leaf from other major global equity markets which indicated a sea of green in today’s trading session. Our local market managed to trade higher, bolstered by the weaker Rand which led to Rand hedges trading firmer.

The Rand weakened to just above R13 against the greenback, after the Public Protector suggested that a process to change the Constitution to alter the Reserve Bank’s primary objective should be initiated. Some of the proposals include the central bank holding regular consultations with parliament to achieve meaningful socio-economic transformation, and a change from its objective to “protect the value of the currency”, to “promoting balanced & sustainable economic growth in the Republic while ensuring that the socio-economic wellbeing of the citizens are protected”.

The weakness in the local currency was as a result of the fear that the central bank’s independence to undertake effective monetary policy is going to be severely compromised, should the recommendations be pursued. The Rand did manage to bounce off from the lows that were recorded as a result of this announcement, and the USD/ZAR was trading at R12.93 when the JSE closed.

The JSE All-Share Index closed 1.54% firmer, with the blue chip Top-40 index closing up 1.95% led by the Mondi Ltd & Mondi PLC which closed up 6.2% and 5.94% respectively. The Top-40 was also buoyed by Naspers which closed 3.88% firmer, after its associate, Tencent Holdings, closed up 2.27% on the Hang Seng in today’s trading session. Most of the major indices on the JSE closed in the green, with the Resources index closing up 2.02% & Industrials firming 1.93%. The Financials index also closed firmer despite the relatively weaker Rand & the index was up 0.71%.

Gold continued to trade lower in today’s trading session & managed to break below the price of $1250 per ounce. This break was after US Fed governor, William Dudley, reiterated that the Fed was happy with the current level of unemployment and inflation, and that the US economy was close to full employment. This set the tone for strengthening of the US Dollar which inversely resulted in a minor sell-off in Gold. At the JSE close, Gold was trading at $1248.52 per ounce.

Palladium started off the day on a positive note but eventually turned red in the afternoon session after the US Dollar strengthened. The trend was more or less similar in Platinum as the metal failed to maintain gains recorded just after the open. At the JSE close Platinum was trading at $924.10 per ounce, whilst Palladium was trading at $863.94 per troy ounce.

Brent Crude was just a touch firmer in today’s trading session. This move saw Sasol having a positive move on the day eventually closing at R369.56 per share. Brent Crude opened slightly lower in today’s trading session following the increase in US oil rigs recorded by the Baker Hughes Rig Count on Friday. However the commodity did turn for the better and traded in the green for most of the afternoon session and was recorded at $47.77 per barrel when the JSE closed.