Picture: Denis Farrell / AP

JOHANNESBURG - Government bonds weakened and the rand extended losses against the dollar yesterday after President Jacob Zuma reshuffled his cabinet.

Stocks retreated led by bullion shares coming under pressure on the back of a lower gold price.

Zuma changed six ministers in his second cabinet reshuffle in seven months, including those for energy, home affairs, education and communications. He also axed a vocal critic of his presidency. At 4.10pm, the yield on the benchmark government bond was up 10.5 basis points at 8.745percent, their highest level in one week.

At 5pm, the rand bid at R13.4534 to the dollar, 16.35c softer than at the same time on Monday, and about 1.11percent weaker than its overnight close. The currency had started the session on the back foot, pressured by a stronger dollar. “The cabinet reshuffle drove bonds higher and the rand also moved slightly higher. The market is taking it slightly negative,” said Rand Merchant Bank fixed income specialist, Michelle Wohlberg.

Traders said the rand, like other emerging currencies, was weakened by a resurgent dollar, propped up on the day by a report that US President Donald Trump was leaning towards picking a hawk as the next head of the Federal Reserve. On the bourse, the benchmark JSE Top40 index dropped 0.39percent to 51510.16 points, while the broader all share index lowered 0.48percent to 57882.67 points.

The bullion sector fell 1.78percent after gold prices were down to a one-week low on speculation that the eventual successor to Fed chairperson Janet Yellen would favour higher interest rates. AngloGold Ashanti declined 3.52percent to R124.30.