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JOHANNESBURG - The rand slipped to its weakest in two weeks yesterday as heightened concerns over the impact of a trade war between China and the US hit investor demand for emerging market currencies.

Stocks were also weaker on the day.

At 5pm, the rand bid at R11.8914 to the dollar, 7.92cents softer than at the same time on Tuesday, its softest level since March21, from an overnight close of R11.8250 in New York.

Risk-off sentiment was sparked by Beijing’s announcement of a 25percent levy on 106 US goods including soya beans, chemicals, vehicles, some types of aircraft and maize products. .

The rand’s carry trade potential has also suffered after the local central bank eased lending rates last week just as the US Federal Reserve embarks on a hiking cycle, causing the rand to lose out to the likes of the Turkish lira.

In fixed income, the yield for the benchmark government bond was up 5.5 basis points at 8.070percent.

The benchmark JSE Top40 index was down 0.27percent at 48051.9 points, while the broader all share index closed 0.48percent lower at 54602.68 points.

“We have seen a pullback in some of our banking and retail stocks but the real issue going forward is how the trade war situation pans out,” said Ferdi Heynke, portfolio manager at AfriFocus Securities.

Shares in retailer Steinhoff fell as much as 11 percent on the day, closing 9.85percent lower at R3.02.

On Tuesday the firm assessed the value of a portfolio holding a major part of its property assets at less than previously estimated.

Meanwhile, the dollar weakened and global stock markets fell yesterday after China retaliated in an escalating trade war with the US, unnerving investors who were reluctant to take positions in anything but the safest of assets.

Oil dropped to a two-week low as the speed with which Beijing responded - 11 hours - to US measures raised the prospect of a quickly spiraling trade war that could hurt the global economy and dent crude demand.

Gold hit a one-week high as the dollar dipped against the yen and Swiss franc, while prices of US Treasury securities and German bunds gained on safe-haven buying.