JOHANNESBURG - The South African currency traded on a firmer footing as the policy rate decision matched expectations according to NKC Research.
The South African Reserve Bank (Sarb) played into expectations for a rate cut of 50 bps to 3.75 percent, as the Committee considered risks to the inflation outlook to be skewed to the downside. The Sarb’s revised growth forecast for 2020 – a contraction of 7 percent – more closely aligns with our own expectation (-7.2 percent). In April, Sarb projected a contraction of 6.1 percent. On US soil, yesterday’s data release indicated that jobless claims continue to retreat from their peak, albeit still at painfully high levels. At the close of local trade, the rand quoted 1.86 percent stronger at R17.68/$, after trading in range of R17.52/$ - R18.04/$. The rand traded steady overnight. Expected range today R17.55/$ - R18.00/$.
South African bourse
The JSE All Share (-2.15 percent) traded in the red yesterday, dragged by losses across the board apart from large financial stocks (+1.65 percent) that found support in a stronger rand. In local news, Vodacom (-0.15 percent) has simplified its business structure by creating a standalone South African operating company as the telecom giant continues to expand its African footprint. In the overall EM sphere, the MSCI Emerging Market Index (-0.16 percent) traded lower.
Brent crude oil
The Brent oil price reversed initial gains late in the European trading session yesterday as Sino-US tensions continue to flare up. At the close of local trade, benchmark Brent crude futures quoted 0.27 percent weaker at $36.33pb. Crude prices fell during Asian trade this morning after China failed to provide an economic growth target for 2020, which raised concerns about fuel demand for the rest of the year.