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Johannesburg - The rand weakened against the dollar and investors pushed bonds lower on Wednesday due to brewing labour unrest in the platinum sector that was threatening to hurt the crucial mining sector of Africa's largest economy.
South African workers at the world's biggest producer of the white metal, Anglo Platinum [JSE:AMS], refused to report for overnight duty on Tuesday after their employer's announcement that 14 000 jobs would be cut and four shafts closed indefinitely.
Investors dumped bonds, driving the yield of the benchmark
13-year paper 7.5 basis points higher to 7.21% at 06:27 GMT.
The two-year bond's yield rose 5.5 basis points to 5.38%.
The rand slid 0.5% to a six-week low of R8.8605 at 06:10 GMT.
"We would not be surprised if it continued to weaken to R8.90 to the dollar over the coming days. Proposed job losses within the platinum sector are at the heart of the latest wave of rand bearishness," Absa Capital said in a note.
Amplat's decision could trigger a fresh wave of wildcat strikes similar to the one that swept through the platinum and gold sectors last year, leaving more than 50 people dead and slowing South Africa's economic growth.
The government, which stands to lose substantial amounts of
money from tax and royalty income, came out against Amplat's proposed cuts
Fitch ratings agency dropped South Africa's credit rating by a notch last week, citing among other things, uncertainty in the mining sector.
Investors will be watching retail sales and manufacturing numbers scheduled for release on Wednesday for direction but events in the mining sector were still weighing on sentiment.
"The prior highs of R9.010 are looking increasingly realistic and whilst they might not be reached today, they could be by the end of the week if yesterday's market performance is repeated," Traditional Analytics said in a note.
