Rand firmer after weak US payrolls, stocks up

Johannesburg - The rand firmed against the dollar in early trade on Monday, on track for a fifth consecutive daily gain after weak US payrolls data signalled that a near-term hike by the US Federal Reserve is unlikely.

Government bonds opened stronger with the benchmark 2026 issue shedding 10 basis point to 8.235%.

Stocks opened firmer with the benchmark JSE Top-40 index adding 1.2% to 46 206 points.

By 08:49 the rand was trading at R13.6850/$, up 0.34% from Friday's New York close. It stood at R13.62 by 10.07.

"It appears that the world's investment community seems to be latching onto the 'lower rates for longer theme', said Warrick Butler, a chief currency trader at Standard.

Traders however said the rand remains vulnerable as swinging sentiment and post payrolls volatility still imply elevated risks.

"Risk assets have had a harder time as they weigh up the lower Fed rate outlook with yet further uncertainty. The rand exemplifies this theme nicely, having initially weakened after the figure before gaining mildly," said John Cairns, a currency strategist at Rand Merchant Bank.

Concerns over emerging markets have spiralled, with falling commodity prices, a local strike in the coal sector, surging outflows and slow growth in China all creating talks of "an emerging market crisis".

On the local front, National Union of Mineworkers went on strike in the coal sector on Sunday after wage talks collapsed last week. The lion's share of the country's electricity is generated from coal, a commodity also exported to Europe and Asia.

Central banks are the focus this week with the US Fed minutes coming out on Thursday, which will shed light on how concerned it is about market volatility and the potential spillover from global growth.