Rand stutters as low liquidity pauses rally

Johannesburg - The rand weakened slightly in early trade on Thursday but remained below the crucial 16.00 mark while yields on bonds fell sharply with appetite for emerging assets returning as oil prices recovered.

Stocks were set to open firmer at 09:00, with the JSE securities exchange's Top-40 futures index adding 1.25%.

At 08:45 the rand had slipped 0.43% to R15.9980/$, surrendering overnight gains that saw the unit reach 15.9200, as low liquidity in global markets capped gains ahead of employment data from the United States on Friday.

The benchmark government bond due in 2026 shed 14.5 basis points to 9.135%, just shy of its firmest in two months.

"It's the sharp turnaround in the currency that has led to the bonds being taken. But its being done on really thin volumes this morning," said bond trader at World Wide Capital Securities Dale Forssman.

Bonds fed-off the currency's overnight rally as yields fell, with sentiment towards emerging markets aided by rising crude prices, after talk of producers potentially meeting to discuss output cuts lifted the oil market.

South Africa expects January business confidence indicators at 11:30. The index is currently languishing at its lowest level in 23 years.