South Africa’s rand hit a two-and-a-half month high against a broadly weaker dollar and local stocks gained on Monday as raids on the Hamas-run Gaza Strip buoyed gold prices and boosted miners of the precious metal.
The Johannesburg Top-40 index of blue-chip stocks ended up 1,18% at 19 158,60 points after earlier adding more than 2% in holiday-thinned trade, while the all-share index rose 1,14% to 21 237,59 points.
The local currency was trading at 9,4650 to the greenback at 3.30pm GMT, 2,6% stronger than its previous close in New York, after earlier touching 9,41, its firmest level since October 15.
”A bad day for the dollar really, that has been the driver,” Bidvest Bank chief dealer Ion de Vleeschauwer said.
”There is not a lot of activity around, corporate activity has virtually dried up … so the market will be dictated by the dollar,” he said, adding the rand had been due a correction.
The dollar fell broadly, weakened by a grim outlook for the US economy and the Federal Reserve pouring liquidity into a battered US banking system.
Higher metals prices also supported the rand, given South Africa is a leading producer of gold and platinum.
Miners drove buying on the local stock market, as gold rose after Middle East tensions sparked an oil rally, prompting investors to snap up safe-haven bullion, and the dollar weakened sharply against the euro. Gold eased off its earlier highs after oil gave up some of its gains.
”Resource and gold stocks are propping up the market,” said Andrew Todd, a trader at BOE Private Clients. ”There’s been a big move in metal prices on the back of a weaker dollar and Middle East tensions.”
Harmony Gold rose 6,38% to R100, Gold Fields gained 6,35% to R90,40 and AngloGold Ashanti hopped up 3,52% to R257.
Platinum also rose, boosting Anglo Platinum 5% to R528 while Impala Platinum jumped 6,91% to R130,20 and Lonmin pushed up 4,33% to R131,99.
South Africa’s government bond market was subdued, with yields little moved and trade thin.
The yield, which moves inversely to the price, on the 2015 bond was up three basis points at 7,29%, while the 2036 yield was the same margin higher at 6,84%.
The yield on the 2010 bond added 1,5 basis points to 7,385%.
Traders may watch for local trade account data on Tuesday and credit and money supply figures on Wednesday for direction. – Reuters