Rand softer on China data jitters, stocks flat

Johannesburg - The rand reversed earlier gains inspired by domestic economic data, succumbing to pressure from reduced appetite for emerging market assets after Standard & Poor’s downgraded Brazil and ahead of a slew of Chinese data.

On the local bourse, the Top 40 index was flat, a move likely to translate in the actual share index opening little changed.

At 08:30 the rand softened by 0.2% to R13.6500/$, having climbed more than 1% in the previous session after factory and mining data surprised on the upside, both rising 5.6% year-on-year in July.

"Disregard the strong annual growth readings. Factories are dealing with weak GDP growth, power outages, and slack external demand," analysts at NKC African Economics said.

The rand faces headwinds from Chinese industrial output, retail sales and investment data due on Sunday, with investors searching the figures for clues on the extent of the slowdown in the world's second-largest economy.

S&P's unexpected decision to cut Brazil's credit rating to junk is also set to dampen investor appetite for risky assets in the run-up to the US Federal Reserve's policy meeting next week, where the bank is expected to raise rates for the first time in nearly decade

Yields on government bonds were lower in early trade, with the benchmark issue due in 2026 dropping 2.5 basis points to 8.46%.