Compiled by Dhivana Rajgopaul
JOHANNESBURG - Risk-on mood (thanks to positive signals from Sino-US trade talks) sheltered the rand from souring sentiment towards the fragile economy according to NKC Research.
The blanket support from external sentiment shifts dismiss a brittle fiscal position and worsening debt burden – with the deficit expected to widen to 15.5 percent of GDP and public debt expected to rise to 73.6 percent of GDP by year-end. With local elections looming in 2021, there will be considerable pushback against any fiscal medicine the IMF (and Finance Minister Tito Mboweni) intends to prescribe, leaving little supportive fundamentals for the rand; as such, the local unit is particularly well-positioned to benefit from a softening dollar narrative, which clouds a spectrum of domestic sins.
At the close of local trade, the rand quoted 0.57 percent stronger at R16.83/$, after trading in range of R16.72/$ - R16.97/$. The rand traded steady overnight. Expected range today R16.65/$ - R16.95/$.
South African bourse
The JSE All Share (-0.90 percent) ended in the red yesterday dragged by losses in large gold mining (-3.04 percent) stocks. In the overall emerging market sphere, the MSCI Emerging Market Index (+0.59 percent) traded firmer.
Brent crude oil
The Brent oil price extend gains yesterday driven by production cuts in the Gulf of Mexico, as a result of adverse weather conditions, while US and Chinese officials said they remain committed to a Phase 1 trade deal. At the close of local trade, benchmark Brent crude futures quoted 1.24 percent higher at $45.75pb. Crude prices kept grinding during Asian trade this morning.