Rand weakens more than 5% against dollar in April

Cape Town - The rand weakened by 5.1% against the dollar in April, which represented the third-worst return from a basket of emerging market (EM) peers.

According to their macro-economic overview for April, Herman van Papendorp (head of investment research & asset allocation) and Sanisha Packirisamy (economist) of Momentum Investments said the rand's losses against the pound and euro were 3.6% and 3.1% respectively during the month.

The rand traded weaker against major currencies as the market's focus shifted to geopolitical events, including the US/China trade tariff dispute and rising tensions between the US and Syria, they explained.

Rand weakness in April 2018 further supported rand hedges in the industrials composite on the JSE, according to Van Papendorp and Packirisamy.

According to their overview of the JSE, SA equities outperformed global shares and staged a solid performance in the first three weeks of April before trading sideways.

The JSE All-share Index increased by 5.4% in April due to a surge in resource shares. The JSE Resources Index increased by nearly 9% in April.

The first half of the month saw a rally in gold prices due to escalating geopolitical risks. There was also an uptick in platinum group metals prices.

Furthermore, a weaker rand supported gains in resource shares during the month.

The JSE Financials Index sustained losses during the month due to a rise in long bond yields negatively affecting locally-listed financial institutions.

The JSE Industrials Index was supported by decent retail sales figures and the highest consumer confidence print on record for the first quarter of 2018.

Rising US yields saw mounting pressure throughout emerging markets later in April, given an ongoing sell-off in riskier asset classes.

The JSE Mid-cap Index closed 3.5% higher in April 2018, while the JSE Small-cap Index drifted 1.2% weaker in the month.

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ZAR/USD
16.74
(+0.22)
ZAR/GBP
21.02
(+0.41)
ZAR/EUR
19.08
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ZAR/AUD
11.67
(-0.06)
ZAR/JPY
0.16
(+0.42)
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