Markets Wrap: Record rand-bond inflows contrast with JSE dip

The rand has become one of the standout emerging-market currencies this month, drawing foreign investors into South African bonds at the fastest pace since January as the country's carry trade proves among the most lucrative globally, Bloomberg reported. 

The currency had traded around 16.34 to the dollar earlier in the week on a softer greenback, though it has weakened at times even against encouraging local data, including a June trade surplus of R17.75 billion that comfortably beat consensus forecasts of R3.45 billion.

The FTSE/JSE All Share closed lower in the prior session, down 0.34% to 111,493.10, with the Top 40 slipping 0.48% to 103,257.69. Goldman Sachs has flagged that stronger revenue collection, boosted by mining export profits feeding through to corporate tax receipts, could support further sovereign credit-rating upgrades. 

On the corporate side, AngloGold Ashanti reported a 36% rise in second-quarter free cash flow to $727 million, while Prosus lifted EBITDA by 46% to $2 billion and headline earnings by 58% to $1 billion, with free cash flow up 36% over the same period.

International markets

US inflation data released Wednesday came in exactly as expected, easing pressure on the Federal Reserve ahead of its September meeting. The Consumer Price Index rose 0.1% in July, with the annual rate slowing to 3.4% from 3.5% in June, while core inflation, excluding food and energy, increased 0.2% month-on-month and 2.5% year-on-year. 

Shelter costs, which have been a persistent driver of inflation, rose a modest 0.1%, accounting for roughly two-thirds of the monthly increase, while a sharp 2.8% drop in lodging costs helped offset broader pressures. Medical care and airline fares saw larger increases, up 0.4% and 2.2% respectively.

The in-line reading reinforced expectations that the Fed will hold rates steady next month, following a weaker-than-expected July jobs report last week that had already dampened the odds of a September hike. 

Three policymakers dissented at the Fed's July meeting in favour of raising rates from the current 3.50%-3.75% range, but analysts at BMO Capital Markets said Wednesday's data leaves the door open for a pause rather than settling the matter definitively. Treasury yields were little changed following the release.

US equities, already buoyed by strong AI-related earnings, extended gains after the inflation print, with major indexes rising further once rate-hike concerns eased, according to Charles Schwab. Energy prices remain a wildcard, however, with Brent crude touching $90 a barrel and US crude nearing $84 amid the ongoing conflict between the US and Iran, keeping national average petrol prices elevated at $4.03 a gallon.

Compiled from reporting by Bloomberg, Reuters, CNBC, Trading Economics and Charles Schwab