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The rand fell back below R17/$ on Monday afternoon, while the JSE had climbed more than 2% to a new record, with global sentiment lifted by reports China is easing its crackdown on its tech sector.
In late afternoon trade the local currency was 0.83% firmer at R16.96/$ - having now gained more than 3.5% over the past month - while on the JSE, tech stocks and miners were faring well, with Naspers, Prosus, Glencore and Sibanye-Stillwater all gaining more than 3%.
A top Chinese central bank official was reported as saying the clampdown on the internet sector was drawing to a close, offering the prospect of an end to two years of uncertainty sparked by regulatory interventions, including related to gaming restrictions for minors and online tuition.
Market sentiment has also been lifted so far in 2023 after China eased its Covid-19 restrictions, resulting in optimism over the prospects for the world's second-largest economy, while US nonfarm payrolls numbers on Friday has also boosted riskier assets, with slowing wage growth helping to temper expectations over the size of upcoming US Federal Reserve interest rate hikes.
Although a robust jobs number, the trend in the US jobs market is that of a slowdown, said Swissquote Bank senior analyst Ipek Ozkardeskaya in a note, including the announcement of major job cuts in the banking and tech sectors. The positive reaction to the data was due to hopes of a so-called 'soft landing' from ultra-supportive monetary policy, or where inflation is brought under control without too much pain for the jobs market.
"But we should still not forget one thing: the US economy added around 4.5 million jobs last year," said Ozkardeskaya. "That was the second-best year on record after 2021 – where 6.4 million Americans found jobs following the pandemic-shattered economy. The unemployment data hit 3.5%, a multi-decade low, and Atlanta Fed President Raphael Bostic said that the central bank still needs to keep raising the rates despite the cooler-than-expected wages data."
The JSE on Monday had risen to 78 550 points, and was extending records set last week, having now gained more than 7.5% so far in 2023.
"Emerging markets and especially high-yield assets have been bought like Tesla shares, pre-Covid since the start of the year," said Standard Bank executive for rand and emerging market spot trading Warrick Butler said in a note. "I am just hoping they don’t suffer the same late 2022 demise in said stock as predicted by many a commentator, Jim Rodgers and even Warren Buffet among them."