South Africa's rand retreats in global risk-off, stocks fall

JOHANNESBURG: South Africa's rand weakened on Monday as emerging markets were knocked by a retreat in risk demand, with investors opting for safe bets as trade tensions rose between Washington and Beijing.

At 1500 GMT the rand was 0.49 percent weaker at 13.4000 per dollar compared to Friday close of 13.3350.

The greenback was up 0.24 percent against a basket of currencies as trade commenced in New York, in a widely expected resumption of a rally driven mainly by rising lending rates and faster economic growth.

The rand has seen volatile trade over the past week, breaking through the 13.10 level to a seven-week best before sliding back to near 13.50, an inflection point traders have targeted to gauge the currency's longer term trend.

"The whole global trade/growth thing is the catalyst for investors to favour the dollar when headlines become unsavoury," Warrick Butler, chief trader at Standard Bank, said in a note.

"So what we have is a couple of days where a quiet news world pushed people into risk and then smash, a shocker headline pushes everyone back into the dollar."

On Monday Chinese state media lambasted U.S. President Donald Trump's trade policies, further stoking concerns the tariff spat may spill over into a full blown trade war, knocking over the recovery in global growth that has supported emerging currencies.

South African bonds were softer, with the yield on the benchmark paper due in 2026 up 5 basis points to 8.735 percent.

On the bourse, the blue-chip Top-40 index closed 0.4 percent lower at 50,784 points, while the broader All-Share index fell 0.45 percent to 56,861 points.

"The JSE closed weaker on financials and banks as the rand takes a knock as the dollar strengthens. Today was the lowest volume traded day for 2018 so far," said an Avior Capital Markets trader in a note.

The rand-sensitive bank sector traded lower, with the index  ending the session 2.09 percent down.

ABSA Group dropped 2.98 percent to 166.43 rand after it reported a 4 percent fall in half-year profit, weighed down by costs related to its separation from former parent Barclays.

ArcelorMittal South Africa gained over 17 percent, extending a surge as rebar steel prices approached a more than five-year high.