VENTURES AFRICA – The South African rand was steadier in late trade on Monday after it was bid at R8.82 (about $1) from last Friday’s close of R8.85. But analysts did not think the local currency was out of trouble yet.
The currency was recuperating from last week’s weaker levels‚ which saw it toying with the R9 against the US dollar mark as investors got overcome by risk aversion sentiments among other things.
The South African currency was bid at R11.26 against the Euro from its previous close of R11.28 and at R14.02 against sterling from R14.06 before.
“We don’t think the rand is out of the woods yet‚” said Mike Keenan‚ analyst at Absa Capital. “On the domestic front‚ we still have a poor macro-economic backdrop and the upcoming ANC national elective conference. Internationally‚ the looming US fiscal cliff will weigh on the currency.”
Meanwhile, the JSE closed firmer in Monday’s late trade, tracking the European and US markets.
The German Dax and Paris CAC traded more than 2 percent higher and the Dow Jones grew more than 1 percent by late morning.
At the close of markets on Monday afternoon, the All Share Index (Alsi) had gained 1.12 percent at 37 229.64 points.
The platinum sector surged 5.03 percent and resources gained 2.05 percent.
“There are no specific headlines driving our markets higher. We have a reasonably strong platinum and gold price. It was a good start to the week‚ after last week’s volatility‚” a Johannesburg-based trader said.
Confident market reaction moved all major European exchanges higher on Monday afternoon.
The UK’s FTSE 100 was 1.71 percent stronger as market worries over the US “fiscal cliff” faded after talks to resolve the issue seemed to run aground.
US shares opened the week with strong advances while investors peeped ahead to a potential deal on Capitol Hill that could avert a hit to US economic growth in the new year‚ according to Dow Jones Newswires.
The Dow Jones Industrial Average gained 0.71 percent to break a four-session losing streak.
President Barack Obama‚ speaking in Bangkok during his three-nation trip of Asia‚ said he was confident the lawmakers could deal with the US fiscal situation.
“Markets are trading with a positive tone in European trading hours‚ with equities stronger and the euro and risky currencies generally stronger versus the dollar‚ despite event risks in Europe‚” Barclays, the parent company of Absa, South Africa’s biggest retail bank, said in a note.
“We think the US fiscal cliff will continue to be a dominant theme in the market into the year-end. The possibility of higher dividend taxes in the US appears to be taking a toll on high dividend yielding stocks‚ with the highest yielding stocks atypically underperforming in a sharply down market. We expect speeches in the coming weeks to begin to stabilise these stocks.”