JOHANNESBURG (Reuters) -South Africa’s rand, stocks and government bonds traded lower on Friday, snapping weeks of gains as Israeli military strikes on Iran drove investors away from riskier assets and toward safe havens, analysts said.
Local assets’ strong run has been fuelled by coalition partners resolving a budget dispute as well as by talk of a lower inflation target and strong precious metal prices.
But by 1500 GMT on Friday the risk-sensitive rand traded at 17.8850 against the dollar, 0.7% below Thursday’s close.
The escalation of hostilities in the Middle East adds a fresh layer of uncertainty for financial markets at a time of pressure on the global economy from U.S.
President Donald Trump’s erratic trade policies.
“This kind of uncertainty cannot be quantified, but it will definitely not have a positive effect on risk assets such as equities and developing country currencies and bonds,” said Casparus Treurnicht, portfolio manager at Gryphon Asset Management.
A looming long weekend in South Africa due to a national holiday on Monday has likely amplified the sell-off, said Danny Greeff, co-head of Africa at ETM Analytics.
Local consumer inflation and retail sales figures next week may influence the South African Reserve Bank’s thinking on monetary policy, though its next rate decision is not due till the end of July.
The Johannesburg Stock Exchange’s Top-40 index traded down 1.4%.
The yield on the benchmark 2035 government bond was up 7 basis points to 10.155%.
(Reporting by Sfundo Parakozov and Alessandro Parodi;Editing by Alexander Winning and Gareth Jones)
