File image: The Johannesburg Stock Exchange. (File picture: Siphiwe Sibeko).
JOHANNESBURG - The rand tumbled yesterday after US President Donald Trump’s decision to pull out of an international nuclear deal with Iran hit global risk sentiment, but stocks closed stronger.

At 5.06pm, the rand traded at R12.6075 to the dollar, down 0.32percent from its close on Tuesday, after earlier weakening more than one percent to R12.72. However, at 5pm, the rand bid at R12.5825 to the greenback, 4.61cents firmer than at the same time on Tuesday.

Currencies of developing nations have been under pressure after the dollar started a relentless ascent in mid-April and US Treasury yields climbed above the psychological 3percent threshold.

Adding to their woes was Trump’s decision on Tuesday to pull out of an international nuclear deal with Iran, hurting risk appetite and sparking worries about fresh tension in the Middle East and global oil supplies.

“With both oil price and rand volatility likely in the traditionally more risk averse period in the middle two quarters of the year, South Africa could see even more rand weakness if Trump heats up the rhetoric further,” Investec chief economist Annabel Bishop said.

In fixed income, the yield for the benchmark government bond due in 2026 rose 6.5 basis points to 8.455percent, reflecting weaker prices.

In the equities market, the all share index climbed 0.43percent to 57915.13 points, while the blue chip Top40 index rose 0.54percent to 51279.36 points.

The reaction to Trump’s decision in the South African stock market was largely muted, with MTN Group being one of the few affected firms.

The telecoms firm said yesterday that Trump’s decision may limit its ability to repatriate cash from MTN Irancell, sending its shares lower.

MTN pared losses, closing 0.58percent weaker at R124.22.

Internet and entertainment firm Naspers struggled to hold on to its gains after saying it sold its entire 11.18 percent stake in Indian-e-commerce firm Flipkart to Walmart for $2.2billion (about R27.6bn).

The market heavyweight had gained more than 1.5percent. It closed flat at R3076.05.

AngloGold Ashanti was among top gainers, rising 3.65percent to close at R113.14.

- REUTERS