Rand shows muscle — rate hike fades

The rand perked up on Friday after the disappointing US jobs report knocked the dollar and brought into question the US growth momentum.

The US created 138,000 jobs in May, below forecasts of 182,000. The figures were weaker compared with downwardly revised job figures of 174,000 in April.

The rand strengthened to R12.77/$, from R12.96/$, as markets tempered expectations of interest-rate increases in the US later this year.

Markets were expecting at least two more rate hikes from the US Federal Reserve, which earlier this year increased the repurchase rate by 25 basis points.

"Overall, the latest employment report is a little disappointment, especially the downward revisions to prior months, the stagnant growth in wages, and the structurally low participation rate," said Stanlib economist Kevin Lings.

The JSE All-Share index ended relatively flat on Friday, but was off 2% to 52889.70 points on the week, during which mining shares, industrials, as well as financials fell sharply before stabilising by Friday.

Mining shares reeled from a renewed drop in commodity prices, ranging from iron to Brent crude that hovered around $49 a barrel late on Friday.

Stock losses ran into double digits for a range of mining stocks, including Lonmin (down 16%), Harmony Gold (13%) and Assore (11%). The relatively stronger rand magnified the moves.

Big industrial stocks also came off the boil, partly on account of a firmer currency and some profit taking in select stocks such as Naspers.

Mr Price stood out as the best performer on the week (up 6.5%) after the retailer raised its dividend even as it reported a first drop in its annual profit in 16 years.

S&P Global Ratings' decision to keep South Africa's sovereign credit rating unchanged late on Friday after the market close would be likely to provide a tailwind for sectors such as banks this week.