(Reuters) – South Africa’s rand recovered against the dollar in early trade on Tuesday, but gains were capped as a slump in China’s imports raised concerns of a more severe slowdown in the world’s second-largest economy that have been rattling global markets.
Stocks look set to open at least 300 points higher as equity futures on South Africa’s blue-chip Top-40 index, which often act as a precursor of the actual index, gain 0.73 percent. But gains are expected to be restricted after China’s August imports fell less than expected, reflecting both lower global commodity prices and persistently sluggish demand from the largest importer of commodities.
At 0625 GMT the rand rose 0.32 percent at 13.9150 against the dollar after tumbling to an all-time low of 14.0175 on Tuesday.
“We are surprised that the market has not focussed on the much-worse-than-expected 13.8 percent year on year decline in imports,” John Cairns, a currency strategist at Rand Merchant Bank, said in a note.
Lower Chinese imports are negative for South Africa as low demand comes at a time when the domestic economy is already hit with low commodity prices and sluggish economic growth.
“Weak data from China can still affect market sentiment, even if the reliability of some data has been questioned,” said Peter Worthington of Barclays Africa in a note.
Yields on government bonds were mostly high, but the benchmark 2026 issue was down 1.5 basis points at 8.600 percent.