Downbeat US data sparks rand rally

31 July 2016 - 02:00 By ANDRIES MAHLANGU

The rand cracked through the R14/$ barrier for the first time since November following the release on Friday of disappointing US GDP data for the second quarter.The US economy grew at an annual pace of 1.2% in the three months to June from revised 0.8% (1.1%) growth in the preceding quarter, falling short of market forecasts of 2.6% growth."The data brings into question the strength of the US economy and diminishes the likelihood of an interest hike in the near term," said Nilan Morar, head of trading at GT Private Broking.The figures knocked the dollar and boosted the rand, which strengthened more than 2% against the greenback on Friday, although positive local trade data also contributed.The weaker dollar translated into higher commodity prices, with platinum rallying to its best level since May last year at about $1158 an ounce.The higher metal price did not immediately filter down to platinum shares, which had outperformed on the JSE earlier this week.Anglo American Platinum and Impala Platinum shot up 13% and 18% respectively over the week. Sasol was the outlier in the resources complex, losing 8% in value."Markets started the week on a sound but cautious footing, following some better-than-expected corporate earnings," said Caroline Cremen, portfolio manager at Standard Broking."However, poor GDP figures from the US and the EU and tepid monetary stimulus measures from the Bank of Japan have injected a dose of reality back into markets that have been plagued by excessive hubris."The broader All Share index ended slightly weaker on the week at 52797.60 points, dragged down in part by industrial stocks.Analysts said local markets, particularly the rand, would tread carefully in the lead-up to the elections on Wednesday. Cremen said it was not so much the outcome of the vote but the general reaction to the results that would affect the currency...

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