Markets Wrap: Rand near five-month high as oil surges on Hormuz tensions

The rand held steady near a five-month high on Wednesday, trading at 16.19 to the dollar in early trade, as markets digested this week's disappointing local unemployment data and looked ahead to fresh US inflation figures. 

Adam Phillips, a treasury specialist at Umkhulu Treasury, noted the currency has held resilient below the 16.25 level even as data released on Tuesday showed South Africa's official unemployment rate climbing to 33.6% in the second quarter, from 32.7% in the first.

On the JSE, the FTSE/JSE All Share Index has continued a strong run through the year, trading in a range between roughly 110,800 and 112,550 points over the past month, and up more than 12% over the past 12 months.

International markets

Global markets were largely in a holding pattern on Tuesday, trading near recent record highs ahead of Wednesday's US Consumer Price Index release for July, due at 8:30am US Eastern time. Trading desks described thin volumes and narrow index moves as investors awaited the data, which will shape expectations for the US Federal Reserve's next move on interest rates.

US annual inflation eased to 3.5% in June, from 4.2% in May, aided by a slowdown in energy costs following the ceasefire between the US and Iran, though markets remain wary of a hotter-than-expected print reversing recent gains.

Gold slipped below $4,400 an ounce on Tuesday, giving back earlier gains as investors booked profits following a rally driven by escalating tensions in the Strait of Hormuz, and turned their attention to how surging oil prices might feed through to inflation and interest rate expectations.

Bullion had briefly spiked above $4,400 during the session on reports that Iranian forces had stepped up harassment of tanker traffic in the strait, before easing to close at $4,371 an ounce, down 0.7% on the day. Chinese demand has remained a persistent source of support, with the People's Bank of China adding around 20 tonnes of gold to its reserves in July, its largest monthly increase since October 2023.

Oil markets, meanwhile, extended their advance, with Brent crude climbing back above $87 a barrel and briefly testing levels above $90 amid renewed disruption to shipping through the Strait of Hormuz, a critical corridor for global energy supply. 

Reports suggested talks between Iran and Oman over a potential shipping arrangement were at an advanced stage, though no formal deal has been confirmed. Pakistan's defence minister said Washington and Tehran were nearing an arrangement over the strait.