September 13, 2019 / 4:06 PM / 6 days ago

UPDATE 1-S.Africa's rand firms as trade optimism lifts risk assets, stocks up

(Updates prices)

JOHANNESBURG, Sept 13 (Reuters) - South Africa’s rand firmed against the dollar on Friday, as signs of a thaw in U.S.-China trade tensions and monetary easing in the euro zone and Turkey buoyed developing world currencies.

Stocks also rose, led by the banking sector.

At 1530 GMT, the rand was 0.55% firmer at 14.5200 per dollar.

“The local unit seems to be starstruck by global markets as all elements move in favour of the rand. The past two weeks have seen markets turn from skittish and risk averse, to an emerging market dream,” Bianca Botes, treasury partner at Peregrine Treasury Solutions, said in a note.

China resumed purchases of U.S. farm products, a move seen as a goodwill gesture before trade talks next month. U.S. President Donald Trump said on Thursday he did not rule out the possibility of an interim pact, although he said an “easy” agreement would not be possible.

Risk appetite was also boosted after the European Central Bank on Thursday pledged indefinite stimulus to revive an ailing euro zone economy, setting the stage for a 25 basis point reduction in key borrowing costs from the U.S. Federal Reserve next week.

On the bourse, stocks gained with the broader All-share index up 0.6% to 57,124 points, while the benchmark Top-40 index rose 0.74% to 51,146 points.

The banking index was up 1.89%, with Investec rising 4.61% to 89.62 rand, while Absa increased 3.05% to 167 rand, and Capitec rose 2.25% to 1,274.00 rand.

Nick Kunze, portfolio manager at Sanlam Private Wealth, said the stronger rand had lifted financial stocks.

South Africa’s second biggest insurer, Old Mutual, gained 1.67% to 20.08 rand after it said it wasn’t backing down in a dispute with its fired CEO Peter Moyo.

Bonds weakened, with the yield on the benchmark instrument due in 2026 adding 4 basis points to 8.14%. (Reporting by Nqobile Dludla, Olivia Kumwenda-Mtambo and Onke Ngcuka; Editing by Alex Richardson)

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