Johannesburg - South Africa's rand firmed slightly against a wobbly dollar in late Johannesburg trade on Monday while local stocks fell for the second straight session.
Share prices on the local bourse weakened, with heavy losses across the board, but clawed back some losses later in the session as US markets opened firmer.
The JSE Top-40 index of blue chips shed 0.91% at 23 439.69 points, while the all-encompassing all-share index closed 0.94% lower at 26 112.73 points.
"The world markets were down (earlier) and we are playing catch up but we are not as down much as one would have expected and that's on the basis of a very, very weak rand, which has supported our heavyweight miners," said Michael Carlsson, a trader at Consilium Capital.
The rand was trading at 7.8330 against the dollar at 17:48, about 0.3% firmer than its opening level of 7.8640. Most dealers attributed its Asia spike to 8.2550 to a technical glitch.
"I think there was a lot of confusion with that move in the far East, but it's been pretty range-bound," said Jim Bryson, chief dealer at Rand Merchant Bank.
After trading weaker for most of the session the rand firmed in late Johannesburg trade as the greenback fell due to US economic data that boosted risk appetite.
But Bryson said the local currency was likely to weaken further in the next few sessions.
"We do think it can weaken further ... above 7.83/85 we are looking to test 7.98 and if we can get through there we are looking for 8.08/12."
On the bourse, Liberty International was the biggest loser, dropping 5.07% to R56.01, and African Bank Investments lost 4.94% at R29.28. The local financial index fell 2.11%.
Mining shares were also lower, with Anglo Platinum down 4.74% at R651.65 and Exxaro slipped 3.28% to R85.60.
However, the gold mining index bucked the overall downward trend and gained 2.27%. AngloGold Ashanti led the pack, ending 3.52% firmer at R300.10 after it reported a better-than-expected headline loss for the third quarter.
Government bonds fell after last week's heavy gains due to short-covering, with dealers looking forward to Tuesday's weekly auction for indications of whether local funds keep up their demand for government debt.
The yield on the 2015 bond was up 5.5 basis points to 8.485% and that on the 2036 note was 3.5 basis points higher at 8.755%.
"The street was not short anymore," said Neil Evans, bond trader at Nedbank.
"The key question is whether we see institutional support for tomorrow's auction. The last two auctions were place at an average of 25 basis points higher than current yields so there's a real risk local funds will stay out of the market ... that will be the key whether we push higher or not."
The government will issue R900m of its 2018 bond and R1.2bn of its 2021 bond at its weekly auction - an increase of R100m.
Market appetite for local bonds has gradually waned as the government is expected to issue more bonds to cover its record fiscal deficit of 7.5% in the 2009/10 fiscal year.
- Reuters