Updates rand, bonds; add stocks
JOHANNESBURG, Oct 9 (Reuters) – South Africa’s rand firmed on Friday, as hopes for U.S. stimulus spending lifted sentiment globally, encouraging investors to buy riskier assets in emerging markets.
At 1500 GMT, the rand ZAR=D3 traded at 16.4350 against the U.S. dollar, 0.93% stronger than its previous close.
The expectations of stimulus in the world’s largest economy have provided a welcome boost for the rand by weakening the dollar .DXY and boosting appetite for risk-sensitive currencies.
After stalling talks with Democrats on a comprehensive aid package earlier this week, U.S. President Donald Trump on Thursday called for a “skinny” relief bill that would include elements such as direct payments and a bailout of the struggling airline sector.
“President Trump provided the catalyst for market activity again, as he affirmed his commitment to a stimulus package, which has provided support for emerging markets,” Nedbank analysts said in a note.
Domestic economic data continue to paint a picture of a weak recovery from a deep coronavirus-induced slump.
Investor attention will soon turn to Finance Minister Tito Mboweni’s mid-term budget statement, which is expected later this month and will be scrutinised for signs the government will deliver on promised expenditure cuts.
In an emergency coronavirus budget in June, Mboweni warned that rising debt was like a hippo “eating our children’s inheritance”.
Government bonds rose, as the yield on the 2030 instrument ZAR2030= fell 4.5 basis points to 9.49%.
On the bourse, stocks gained in line with global markets, with the all-share index .JALSH up 1.15% to 55,183 points. The blue-chip Top-40 index .JTOPI rose 1.3% to 50,781 points.
Bullion shares .JGLDX rose 5.95% after a jump in the spot gold price following renewed negotiations for U.S. stimulus prompted investors to buy bullion as a hedge against inflation.
Gold Fields GFIJ.J rose 6.58% to 215.39 rand and Harmony HARJ.J gained 6.84% to 96.55 rand.
Curbing further gains the banks index .JBANK slide 1.03%.
(Reporting by Alexander Winning; Editing by Catherine Evans)
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