UPDATE 2-South Africa's rand, stocks weaker as domestic economy concerns weigh

  • Reuters
  • Forex News
UPDATE 2-South Africa's rand, stocks weaker as domestic economy concerns weigh
Credit: © Reuters.

* Rand tumbles 2 percent to session low
* Bonds weaken before recovering
* UK-focused stocks lead decliners on bourse

(Adds closing stock prices)
By Stella Mapenzauswa
JOHANNESBURG, July 5 (Reuters) - South Africa's assets
weakened on Tuesday as worries about the domestic and global
economy and renewed fears over Britain's vote to leave the
European Union dented risk appetite.
The rand ZAR=D3 stumbled 2 percent to a session low of
14.8555 to the dollar and was trading 1.34 percent weaker at
14.7550 by 1518 GMT.
South African debt weakened alongside the rand, with the
benchmark instrument maturing in 2026 ZAR186= adding more than
10 basis points in the session, before recovering and falling
1.5 basis points to 8.81 percent.
Equities also fell with companies exposed to Britain leading
the decliners while softer metal prices hit mining shares.
The currency has been attempting to recoup the heavy losses
triggered by Britain's vote to leave the EU on June 23, but a
slew of negative domestic data has refocused investors'
attention on sluggish growth in Africa's most industrialised
country.
On Tuesday, data showed consumer confidence slipped further
into negative territory in the second quarter of the year and
the private sector slipped back into contraction in June as
output fell and companies cut jobs.
"The combination of weak data is having an effect on the
rand," NKC African Economics analyst Hanns Spangenberg said,
noting jobs data released on Monday showed a 0.2 percent drop in
people in formal sector employment in the first quarter.

Risk aversion also swept though markets after data showed
China's manufacturing growth stalled last month coupled with
warnings from the Bank of England that the UK's vote to leave
the EU was having an economic impact.
"There is a bit of market uncertainty about what is going on
in the UK," Argon Asset Management economist Thabi Leoka said.
On the bourse, the blue-chip JSE Top-40 index .JTOPI was
off 1.5 percent at 45,330 and the broader All-share index
.JALSH fell by the same margin to 51,670.
Intu Properties ITUJ.J , which owns and manages shopping
malls in the United Kingdom and Spain, dropped 5.9 percent to
51.55 rand, making it the biggest faller on the blue-chip index.
Investment house Brait BATJ.J , owner of Virgin Active and
New Look store chain in the UK, tumbled 4.86 percent to 132.07
rand.
Trading volumes were low with more than 230 million shares
changing hands, below last year's daily average of 296 million
shares.

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