November 7, 2019 / 4:07 PM / 10 days ago

UPDATE 1-S.Africa's rand boosted by U.S-China trade deal hopes, stocks inch up

(Adds latest prices, analyst quotes)

JOHANNESBURG, Nov 7 (Reuters) - South Africa’s rand resumed its advance on Thursday, brushing off a batch of depressing economic data amid renewed expectations that China and the United States will reach a trade deal.

At 1500 GMT the rand was 0.51% firmer at 14.7500 per dollar, a touch off its session best of 14.7140, after kicking off the session at 14.8200.

An official from the Chinese commerce ministry said Washington and Beijing have agreed in the past two weeks to cancel tariffs in different phases.

The news rolled back the previous day’s market jitters triggered by a senior Trump administration official saying a meeting between President Donald Trump and his Chinese counterpart Xi Jinping to sign an interim trade deal could be delayed to year-end.

It also helped the rand weather a dip in business confidence and a contraction in manufacturing that rekindled concern about another poor quarterly growth print.

Industrial output fell 2.4% year-on-year in September and by the same margin on a monthly basis.

“A subdued demand environment continues to plague the domestic economy,” said Investec economist Lara Hodes.

“This implies that the manufacturing sector should detract from topline economic growth in the third quarter,” Hodes said.

Bonds were firmer, with the yield on the benchmark paper due in 2026 down 3 basis at 8.39%.

Analysts said, however, that commodity-linked, liquid currencies like the rand would continue to seesaw as negotiations between the two economic superpowers drag on.

On the bourse, stocks were flat as a drop in business confidence and disappointing local manufacturing data hurt local equities, while the stronger rand pulled dual-listed stocks down.

The benchmark Johannesburg Stock Exchange Top-40 Index was down 0.36% to 51,223.34 points while the broader All-Share Index slipped 0.41% to 57,414.45 points.

“ manufacturing data, we had numbers that came out today that were pretty disappointing,” said Bruno van Eck, trader at Thebe Stockbroking.

“And with the rand strengthening because of this U.S.-China trade announcement that came out this morning, that’s obviously put a bit of a dampener onto the dual listed stocks.”

Retailer The Foschini Group fell to the bottom of the blue-chip index, losing 2.87% to 166.72 rand after it warned on a cautious outlook for its South African business.

Grocer Shoprite followed close behind, dropping 2.43% to 137.99 rand. (Reporting by Mfuneko Toyana and Naledi Mashishi Editing by Frances Kerry)

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