Market Wrap: JSE slumps over 2% amid tech, commodity rout, while rand extends robust run

The rand, bucking the trend as it continues to trade stronger than its emerging market peers, was undoubtedly the star in a market hammered by a selloff in techs and commodities as central banks from Canada to the European Union gave guidance on how they will eventually wind down stimulus in a still vulnerable global recovery. 

In contrast, the Turkish central bank governor hinted at a possible interest rate cut, punishing that country’s local currency. 

The South African unit, now 5% stronger than any other emerging market peer in the past month, flirted with the R14.10-level to the US dollar on Thursday, but has since drifted back to last trade at R14.15 to the greenback. This divergence despite a firmer dollar and a continued rout in commodity prices, “can’t hold forever”. “The one-way trade that the rand finds itself in currently can’t continue indefinitely. We expect a correction is in the offing rather than the rand running to the R13.75-level,” comments TreasuryONE. 

On the economic front, South Africa’s current account surplus rose from 4.3% of GDP in the first quarter to 5.6% in Q2, the largest current account surplus on record, but still below consensus (6.7%). This was driven by a surge in exports (with the goods/services balance surplus rising from 6.3% to 9.0% of GDP), which was partly offset by a widening income balance deficit (from 1.0% of GDP to 2.8% of GDP), reports TreasuryONE. 

And manufacturing output fell 4.1% year on year in July after rising by a revised 11.9% in June. 

On the JSE, bathed in red, it was tech counters Naspers (-7.82%) and Prosus (-6.30%) that felt the brunt of the $60bn tech selloff in China, led by Tencent amid growing fears that Chinese regulators will tighten their grip dramatically on the world’s largest gaming industry. 

And lower metals prices dragged down heavyweight commodity-listed companies, with Implats (-5.95%), Angloplat (-5.46%), Northam (-4.81%) and Royal Bafokeng (-4.62%) leading the losses. Anglogold and Sibanye Stillwater (both down 2.66%) also lost, but South32 bucked the trend, gaining 5.81% to sit pretty among the top winners of the day. 

Banks failed to cash in on the firmer rand, with Capitec taking a massive 6.52% knock, while Nedbank and Standard Bank lost 2.52% and 1.75% respectively. 

Steinhoff slumped 6.46% on a delay in the final vote by claimants in its plan to pay out around R25 billion in compensation to settle a host of lawsuits in South Africa and Europe. 

On the winning side Aspen Pharmacare surged 6.82% after Aspen Pharmacare said it had received two “material” unsolicited offers for its active pharmaceutical ingredient (API) business – which involves the substances used to give medication its effects. 

Sasol gained 2.1% as Brent Crude holds steady above the $72 a barrel. 

Indicators as at 17:00 

USDZAR 14.1282 
EURUSD 1.1813 
EURZAR 16.6847 
GBPUSD 1.3845 
GBPZAR 19.5547 
AUDZAR 10.4320 
CADZAR 11.1652 
CNYZAR 2.1868 
ZARJPY 7.7707 
CHFZAR 15.3756 
USDAOA 630.01 

Bonds and equities 
R186 7.39% 
US 10 Year 1.33% 
JSE -2.02% 
FTSE -0.77% 
S&P 500 -0.29% 

Gold  $1 788.51  
Plat   $982.37  
Plad   $2 245.13  
Rhod  $16 240.00  
Irid  $4 990.00  
Ruth  $693.00  
Copp  $9 356.40  
Brent  $72.70  
Iron Ore 62.5%  $135.56  
Coal API4 $155.50  
Gold ZAR R25 260.92  
Plat ZAR R13 875.05  

Indicators brought to you by TreasuryONE

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