Johannesburg - South African assets were firmer in early
morning trade on Tuesday as investors bet the eurozone financial crisis would
find resolution and as weak global growth made local debt more attractive.
Although the latest data shows foreigners sold bonds for the
first time in three months last week, analysts say slow global growth bodes
well for investment in local bonds and the market is going through a necessary
breather after a long bull run.
But investors are likely to drop all risky assets if the
Greek bail-out seems unlikely after a Greek parliamentary sitting during the
session.
Locally the market is looking to the central bank's first
quarter bulletin out at 08:00 GMT for the state of the current account and the
demand-side of the economy.
This could weigh on the rand if the deficit is wider than
the 3% of GDP the market expects.
Also on the calendar are employment numbers for the first
quarter at 07:00 GMT and a survey of inflation expectations at 13:00 GMT.
Greek worries continue to drive over-all sentiment and the
rand remains vulnerable.
The currency was 0.4% firmer at R6.7670 to the dollar at
06:30 GMT, compared to a close of R6.7940 on Monday.
"The rand remains completely at the mercy of euro/dollar - and so today's Greek parliament vote of confidence in the new cabinet," said RMB in a research note.
"If, as expected, the cabinet is approved, then both
risky assets and euro/dollar would be boosted, sending dollar/rand lower."
The alternative would weaken all risky assets and likely
send the rand sharply weaker against the dollar. In the local debt market
Treasury is selling R1.1bn of the 10-year bond R208 and R1bn of the 7-year
paper R204 and results are due soon after the auction closes at 09:00 GMT.
Benchmark short-dated 2015 bond yields R157 dropped three
basis points to 7.49% and longer-dated 2026 paper R186 gave up 2.5 basis points
to 8.59%.