Morning snapshot: Rand gives up most gains on back of US CPI reading

By 11.08am yesterday the rand was 0.46% weaker at R18.83 against the dollar. Photo: Reuters

By 11.08am yesterday the rand was 0.46% weaker at R18.83 against the dollar. Photo: Reuters

Published Apr 11, 2024


The rand gave up most of its recent gains yesterday on the back of the US consumer price index (CPI) reading, and was trading back in its previous range.

The local currency moves mainly weaker or stronger depending on the strength of the greenback.

By 11.08am yesterday, the rand was 0.46% weaker at R18.83 against the dollar.

It started the day at R18.73 against the dollar, R20.13 against the euro and R23.50 against the pound.

Bianca Botes, a director at Citadel Global, said in a note yesterday that US Inflation data, once again, came in hotter than expected, sending waves through the market as analysts and investors re-evaluated the US Federal Reserve’s rate outlook. Markets were pricing in a mere 50 basis points (bps) rate cut for the year, down from 150bps at the beginning of the year.

“On the data front, we shift our attention to the ECB (European Central Bank) today [Thursday]. The central bank is expected to keep rates unchanged but give guidance on rate cut expectations – markets are positioned for rate cuts as early as June. We will also keep an eye on local business confidence, mining, gold and manufacturing production numbers, as well as US jobless claims, which are due out later in the day,” she said.

Annabel Bishop, the chief economist at Investec, said in a note yesterday that the minutes of the Federal Open Market Committee (FOMC) meeting for March 20 were released last night in the US, causing the rand to weaken as the minutes underscored there was little chance of an imminent US interest rate cut.

“The stubborn nature of inflation, and the bumpy nature of the trajectory, in SA and in the US, has seen interest rate expectations pushed out, with SA only likely to cut its interest rates much later in the year,” she said.

Meanwhile, Trading Economics noted that the JSE All Share index was little changed around 75530 points yesterday in cautious trading ahead of US March producer price index data as investors continued to mull the impact of the hotter-than-expected US inflation print.

“Domestically, traders will closely watch both mining and manufacturing data for February, as well as Sacci Business Confidence,” it said.

The Sacci Business Confidence Index stood at an over one-year high of 114.7 in March 2024, matching February's reading. The latest reading pointed to stabilisation at an improved level despite various local economic challenges faced by businesses.

“Positive international economic and business relations, along with increased year-on-year inward tourism, have played pivotal roles in maintaining business confidence,“ Sacci noted.

Among single stocks, Afrimat led the gains with a rise of more than 3%, after the Competition Tribunal had given it the green light to acquire 100% of Lafarge SA and its subsidiaries for $6 million (R113m), in a transaction that has been described as a “deal of the century”.

Northam Platinum and Barloworld were also among the top advancers, while Karoo and Lighthouse Properties dragged. In corporate news, WeBuyCars has listed on the JSE yesterday with a market capitalisation of R7.82 billion after it was unbundled by Transaction Capital.