July 11, 2018 / 3:59 PM / 8 months ago

UPDATE 2-South Africa's rand ends winning streak on trade war fears

* Stock market dragged lower by commodity stocks due to global fall in precious metals (Adds stocks, updates levels)

JOHANNESBURG, July 11 (Reuters) - South Africa’s rand retreated more than one percent on Wednesday as fears of a trade war between the United States and China hit global demand for emerging market currencies.

Stocks also weakened with commodity stocks taking the hardest knock.

At 1542 GMT the rand was down 1.14 percent to 13.4825 per dollar, its weakest since Friday, snapping a six-session winning streak that propelled to its firmest in nearly a month.

U.S. President Donald Trump said overnight Washington would impose further tariffs Chinese goods, dampening hopes for a descalation in the trade row investors fear will derail a global growth rebound.

Traders, already cautious this week, said they were taking small profits on the rand’s recent rally and positioning for a stronger greenback.

“This toing and froing between China and the U.S. isn’t helping emerging markets. The rand hasn’t taken any local data into account over the last couple of weeks. It’s all about the dollar,” said trader at TreasuryOne Andre Botha.

The rand touched 13.2450 overnight, near a key technical resistance mark, but backtracked soon after with recent buyers now looking to sell beyond the 13.50 level.

Short-term momentum indicators also suggested the currency had strayed into overbought territory, exacerbating the selloff.

Bonds also weakened, with the yield on the benchmark bond due in 2026 rising 2 basis points to 8.74 percent.

South African stocks ended weaker on the day, led by resource shares as commodity prices fell.

On the bourse, the benchmark Top-40 index was down 1.45 percent to 51,044 points while the broader All-Share index lost 1.37 percent to 57,231 points.

Platinum fell 1.13 percent as trade war fears fuelled a sell-off that saw prices hit the lowest in a decade, below the cost of production for many mines in top producer South Africa.

Locally, the mining index was down 2.1 percent, as Anglo American Platinum closed down 1.10 percent to 366.20 rand and African Rainbow Minerals shed 3.06 percent to 115.80 rand.

On the flipside South African retailer Steinhoff, was up 20.86 percnt to 2.26 rand after it announced that it had begun a process with creditors for a “lock-up agreement”, which once completed could allow the restructuring of huge debts within three months. (Reporting by Mfuneko Toyana and Nomvelo Chalumbira Editing by Joe Brock)

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