CAPE TOWN - The rand broke past a key level yesterday, recovering after early concerns about North Korea’s missile launch, while gold stocks rose in a generally lower session.
At 5pm, the rand was bid at R12.9831 to the dollar, 6.35c firmer than at the same time on Monday, breaking past the critical R13 to touch its strongest level in about four weeks.
This recouped all the losses suffered in early deals following news of the launch, which raised fears of war.
“The problem with ... catastrophe trade(s) is that there is only a very small chance of a massive market event and a near certain chance that nothing will happen,” said John Cairns, a currency strategist at Rand Merchant Bank.
“As with all the previous missile launches, (one should) expect risk aversion to die away rapidly, and for risk assets to recoup their losses.” he said.
The rand will look for direction from economic data later in the week in the form of July money supply and private sector credit data today, as well as producer price inflation figures and trade numbers due tomorrow.
In fixed income, the yield for the benchmark government bond due in 2026 was flat.
On the bourse, traders piled into gold mining shares as the price of bullion cruised higher after North Korea fired a missile early yesterday that flew over Japan. AngloGold Ashanti jumped 7.81% to R130.45, while Harmony Gold added 7.05%to R25.51.
Overall, investors took their cue from a downbeat tone in major overseas markets. The JSE Top40 index lost 0.35% to 49883.28 points and the broader all share index dropped 0.26%to 56409.62 points.