The Rand will remain volatile in the elections
Upcoming elections and its effect on the Rand
The rand came under some pressure in anticipation of the upcoming elections and traded weaker at around R14.57, at some stage strengthening to R14.34. As is to be expected, the currency will remain volatile in the last day or two before the elections.
In the past week, local news headlines were dominated by the upcoming elections with less attention than usual being afforded to the economy. The rand came under some pressure in anticipation of the upcoming elections and traded weaker at around R14.57, at some stage strengthening to R14.34. As is to be expected, the currency will remain volatile in the last day or two before the elections. The outcome, and particularly the percentage achieved by the various parties, will give some direction to the currency for the immediate future.
Wall Street stocks rose Friday after US data indicated unexpectedly strong jobs growth and estimated unemployment at a 49-year low. The US economy added 263 000 new positions in April, well above the 200 000 forecasts by analysts. Unemployment fell two tenths to 3.6% but the decline was in part because the pool of workers shrank and fewer people were looking for jobs. The strong jobs data refocused the market after two straight down days. This was prompted by comments regarding inflation from Federal Reserve Chair Jerome Powell, which suggested there would be no interest rate cuts anytime soon; a sentiment reinforced by the news concerning the labour market. The US economy remains robust and it would seem that inflation is under control.
Markets retuned a mixed result for the week. US markets performed well in the latter part of the week and the S&P Index closed 0.20% higher. Markets in Europe closed down, with the FTSE 100 shedding 0.64% and the CAC in Paris losing 0.37%. In Asia, the Nikkei closed unchanged, while the Shanghai composite closed down 0.26%.
Local markets did better despite the upcoming elections as investors prepare for a post-election move on the market. The JSE all-share index closed 0.75% higher with a massive jump in financials of 3.13%, while the resources sector closed 1.29% lower.
The price of Brent crude oil fell to around $70 per barrel as Saudi Arabia committed to increased output to make up for loss of supply from Iran.
Next week’s newsletter will carry a detailed report on the economic impact of the elections.
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