Bonds News

UPDATE 1-S.Africa shares succumb to profit-taking, rand edges off 6-mth best

(Updates prices)

JOHANNESBURG, Sept 18 (Reuters) - South Africa’s stock market corrected sharply during the week after a strong open on Monday as poor retail sales data and a host of bleak company outlooks added to the effects of weaker commodity prices and quarter-end profit taking.

The main index of the Johannesburg Stock Exchange (JSE), one of the best performing globally since the mid-March crash, reversed most of the last few sessions’ gains to fall back to levels last seen in the middle of last week.

The benchmark FTSE/JSE all share index closed 0.66% lower on Friday at 54,674 points. The FTSE/JSE top 40 companies index lost 0.59% to close at 50,399 points. Both the indices fell by around 3% this week.

“When you have a market that has had a good run, there will obviously be profit booking,” said Franco Lorenzani, an independent senior analyst.

He said as the September quarter end approaches, there will be many more investors looking to lock in the profits seen since March.

The South African rand hit its best level in six months against the dollar this week after the central bank kept lending rates unchanged on Thursday and with the dollar losing ground on downbeat U.S. data. It retreated a little on Friday, however.

At 1730 GMT, the rand traded at 16.3075 per dollar, down 0.96%. It has risen 2.75% this week.

The South African Reserve Bank (SARB) left its main lending rate unchanged at 3.50%, saying risks to economic growth and consumer inflation were balanced.

“The U.S. dollar’s retreat bodes well for the local unit, which has breached its 200-day moving average of 16.58,” said Nema Ramkhelawan-Bhana from Rand Merchant Bank in a report, adding that the 16.00 level last seen in mid-March was now firmly in sight.

Government bonds firmed with the yield on benchmark 2030 paper down a basis point to 9.18% by 1730 GMT. (Reporting by Olivia Kumwenda-Mtambo and Promit Mukherjee Editing by Tomasz Janowski, Kirsten Donovan)