South African rand rallies, stocks keep sliding

JOHANNESBURG: South Africa's rand rallied more than one percent on Wednesday after the dollar was subdued by data showing U.S. consumer prices increasing at a moderate pace, easing some concerns about the rising lending rates in the world's largest economy.

Stocks fell but losses were pared by market heavyweight Naspers which surged after better-than-expected Tencent Holdings results.

At 1515 GMT the rand was 1.28 percent firmer at 14.2750 per dollar, its best since last Friday, compared to an overnight close of 14.4600 in New York.

The dollar index was 0.26 percent.

The rand outpaced other emerging market currencies that also rose following the U.S. inflation data, but remains in a narrow band between 14.20 and 14.60 with little momentum to drive it beyond the 14.00 mark seen as a catalyst for further gains.

Retail sales figures for September showed an increase for the quarter, providing another sign Africa's most industrialised economy will bounce back after slipping into recession in the first two quarters of 2018.

Investors are looking ahead to next week's inflation figures and the central bank's decision on lending rates before taking any big positions on the rand.

"We think that growth will pick up over the coming months. Retail sales growth was probably depressed by high inflation at the end of Q3. But we think that headline inflation peaked in October," said senior analyst at Capital Economics John Ashbourne.

Bonds also firmed, with the yield on the benchmark government paper due in 2026 down 8 basis points to 9.17 percent.

In equities, the All-Share index fell by 0.21 percent to 51,999 points while the Top 40 index was 0.06 percent lower at 45,805 points.

Petrochemicals group Sasol slumped 6.13 percent to 437.50 rand after a steep fall in oil prices on reports of output cuts as global growth slowed.

Naspers bucked the market, climbing 4.25 percent to 2,710 rand after Tencent, in which it has a 31 percent stake, reported a 30 percent rise in third-quarter net profit.

"Naspers has probably reached its bottom and we will hopefully see some consolidation after the recent big swings," said Vasili Girasis, equities trader at BP Bernstein.

Retailer SPAR Group Ltd closed 1.22 percent firmer at 177.33 rand after it reported a 1.4 percent increase in full-year headline earnings, boosted by improving contributions from its European businesses.