As we enter the final day before the 21-day lockdown here in South Africa the Rand clawed back some of its losses in overnight trade, trading in the mid- R17.20’s at one stage but has drifted out in the Asian session and is currently trading at R17.36. Some of the Rand strength was due to a US dollar trading a little bit weaker against the Euro. The US dollar is currently trading above the 1.0900 level after trading in the 1.0600’s earlier this week.
The US Senate, overnight, has approved fiscal stimulus legislation worth $2tn to help sustain the American economy during the coronavirus pandemic, in an overwhelmingly bipartisan vote after a week of intense negotiations between the Trump administration and Congress. This could help risky assets in the next couple of days and the Rand in normal circumstances should be on the frontline with news like this. However, we know now that these are not normal times.
In the commodity space, we have seen the commodities trading rather flat overnight, but the news of the stimulus could be a further shot in the arm as the metals reacted positively when indications were that the fiscal stimulus was considered.
On the stock markets, the Dow Jones ended the day in the green, with the index being 2.39% up while the S&P was up by over 1%. Locally the ALSI was up by over 8% which was its best trading day in 24 years. It is clear to seem by this metric alone that volatility is still alive and well in the markets, and could be the order of the day as we head indoors for the next 21 days.