Rand up – equities down

Local equities were once again pulled down by the strong run of the currency dropping 1%, with declines in all the sectors.

The currency flirted with the R/$6 level as it traded at R/$6.02, continuing its strong run. The currency gained more than 1% against all the majors. Bonds strengthened on the back of the stronger currency because inflation expectations are reduced.

The weakness of the dollar over the past few days combined with a warning that there might be terrorist attacks in the US ahead of the elections pushed commodity prices higher with oil leading the way (3%). Gold traded at $407.17, up about 1.25%.

European markets closed slightly higher yesterday while the US traded lower in reaction to a terror warning and not so hot company results. The Far East is trading higher this morning after a week of continued weakness.

We expect that local equities should continue to trade lower on the back of the strong currency.