Rand Gains as Investors Eye Sona and U.S.- China Trade Tensions

South Africa’s rand strengthened against a weaker dollar on Wednesday, as investors awaited President Cyril Ramaphosa’s national address on Thursday and kept a close eye on developments in the ongoing U.S.-China trade dispute. By 15h07, the rand was trading at 18.55 against the dollar, up about 0.70% from the previous session’s close. Ramaphosa is set to deliver the annual State of the Nation Address (SONA), his first under the current coalition government, and investors are keen to hear his comments on key issues such as reforms and fiscal discipline. However, global trade tensions continue to weigh on sentiment, with investors remaining cautious.

On Wall Street, the mood was mixed as the S&P 500 fell by 0.20% and the Nasdaq dropped 0.60%, while the Dow Jones hovered near the flatline. Disappointing corporate earnings were behind the declines, with Alphabet (NASDAQ:GOOGL) shares plummeting nearly 8% after the company missed revenue expectations in its cloud division and revealed plans for higher-than-expected AI spending. Advanced Micro Devices (NASDAQ:AMD) saw a drop of over 10% due to weaker data center revenue, and Apple (NASDAQ:AAPL) fell 1.50% amid reports that Chinese regulators might investigate its App Store fees. Uber’s shares also dropped by almost 6% after it issued weak first-quarter guidance.

In the United Kingdom (TADAWUL:4280), the FTSE 100 ended 0.60% higher at 8 623 on Wednesday, outperforming its European counterparts, buoyed by strong corporate results. GSK (LON:GSK) surged by 7.60% after posting robust results, raising its sales forecast, and announcing a £2 billion share buyback. AstraZeneca (LON:AZN) rose 0.90% ahead of its earnings call on Thursday, supported by GSK’s positive performance. Precious metal miners Fresnillo (LON:FRES) and Endeavour also saw significant gains, climbing 5.80% and 2.80%, respectively, as a strong Gilt auction drove domestic yields lower and softer ISM PMI data in the U.S. put downward pressure on borrowing costs.

European markets reversed earlier losses to close higher, driven by strong earnings across various sectors. The Stoxx 50 rose by 0.10%, while the broader Stoxx 600 gained 0.40%. Earnings reports from companies such as Handelsbanken, AkzoNobel, and Credit Agricole (EPA:CAGR) were closely assessed by traders. Banco Santander (BME:SAN) led the Stoxx 600 with a 7% rise after posting record quarterly profits, while GSK’s strong results propelled it to a 6% gain after it raised its long-term sales forecast.

In Asia, Japan’s Nikkei 225 Index rose by 0.09% to close at 38 832, while the broader Topix Index gained 0.27% to 2 745 on Wednesday. Japanese shares increased for the second consecutive session, supported by a technology-led rally on Wall Street. Market sentiment improved as the U.S. and its counterparts adopted a more cautious approach to tariffs. Domestic data showed that Japan’s real wages grew for the second straight month in December, buoyed by higher winter bonuses, which bolstered expectations that the Bank of Japan may continue to raise interest rates in 2025.

Meanwhile, the Chinese Shanghai Composite fell by 0.65% to 3 229, as the market reopened after a week-long holiday. Investors were faced with escalating trade tensions and persistent economic uncertainties. E-commerce stocks, in particular, were under pressure after the U.S. Postal Service temporarily blocked parcels from China and Hong Kong in response to new tariffs. On Tuesday, the U.S. imposed a 10% tariff on Chinese goods, prompting Beijing to announce retaliatory tariffs on U.S. exports, including oil, gas, coal, cars, and farm equipment, set to take effect on 10 February. China also targeted several U.S. companies for potential sanctions.

In the commodities market, WTI crude oil futures dipped to $71.20 per barrel on Wednesday, following an EIA report that showed a larger-than-expected rise in U.S. crude inventories. Meanwhile, gold surged past $2 850 per ounce, setting a new record high, as investors flocked to safe-haven assets amid rising concerns that the U.S.-China trade war could undermine global growth.




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