WATCH: Rand falls sharply as budget related optimism dissipated
JOHANNESBURG - The South African rand fell sharply as risk-off sentiment swept markets and budget-related optimism dissipated according to NKC Research.
Heading into an eventful and difficult month, we retain our base view that Moody’s will pull the trigger on a downgrade action to junk status in H1 2020. This will however come without the safety net of market complacency and risk appetite, as COVID-19 concerns dominate the financial news flow. We expect disruptions from the coronavirus to prompt global GDP to fall on a seasonally adjusted basis in Q1 – the first quarterly drop since the global financial crisis. Despite mounting anecdotal evidence of widespread supply-chain disruption, it may take until April or May to get a clear idea of its scale in the manufacturing sector at a regional and global level. At the close of local trade, the rand quoted 0.89 percent weaker at R15.42/$, after trading in range of R15.24/$ - R15.45/$. The local unit extended losses during Asian trade this morning to levels last seen in 2016. Expected range today R15.40/$ - R15.85/$.
South African bourse
The JSE All Share (-2.91 percent) tracked global stocks weaker yesterday as coronavirus fears knocked appetite for riskier assets. In the overall emerging market sphere, the MSCI Emerging Market Index (1.21 percent) traded lower.
Brent crude oil
The Brent oil price dropped for the fifth session yesterday due to rising new coronavirus cases outside of China. At the close of local trade, benchmark Brent crude futures quoted 2.67 percent lower at $51.34pb. Crude prices sank further during Asian trade this morning.
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