Rand holds firm ahead of budget review, while unemployment eases slightly

The South African rand was little changed on Tuesday following the release of unemployment and manufacturing data, with traders’ attention largely focused on the upcoming national budget review due on Wednesday. At 12h16 GMT, the rand traded at 17.1450 against the US dollar, hovering near its previous closing level. Earlier data from Statistics South Africa showed that the official unemployment rate fell slightly in the third quarter, easing to 31.90% from 33.20% in the second quarter. The Johannesburg Stock Exchange’s Top-40 Index was last up 0.80%, supported mainly by gains in Gold Fields, Harmony Gold, and Vodacom.

US stock indices were mostly lower on Tuesday amid renewed concerns over the labour market and persistent doubts about whether current AI valuations are justified by fundamentals. The S&P 500 and Nasdaq 100 both hovered in negative territory, while the Dow Jones added around 200 points. Data from ADP indicated that an average of 11 250 jobs were lost per week through most of October, reinforcing a string of downbeat labour reports from other private sources. Meanwhile, stocks with significant exposure to surging AI capital expenditure came under further pressure amid concerns of market froth, following SoftBank’s sale of its entire $5.8 billion stake in Nvidia to finance other AI ventures.

In the United Kingdom, the FTSE 100 climbed more than 1% to fresh highs above 9 900 on Tuesday, after data showed that unemployment had risen to 5%, its highest level since 2021. The increase bolstered expectations of a Bank of England interest rate cut next month, with markets now pricing in an 80% probability of a move in December. Vodafone shares jumped more than 5% after the company reported a return to profitability in Germany and guided earnings towards the top end of its range.

European equities closed sharply higher on Tuesday, extending the previous day’s rally to reach record highs amid optimism that the US government shutdown could soon be resolved and following a series of upbeat corporate announcements. The STOXX 50 gained 1.10% to close at 5 728, while the broader STOXX 600 advanced 1.30% to 580. The Republican-controlled House of Representatives is expected to vote on the spending package approved by the Senate on Monday, potentially ending the record 41-day US government shutdown as early as Wednesday.

In Asia, Japan’s Nikkei 225 Index slipped 0.14% to close at 50 843 on Tuesday, surrendering earlier gains as investors took profits in high-performing technology shares amid persistent concerns about lofty AI valuations. Meanwhile, China’s Shanghai Composite Index fell 0.39% to close at 4 003, and the Shenzhen Component Index dropped 1.03% to 13 289, as investors locked in profits following the Shanghai index’s recent decade highs.

WTI crude oil futures rose to $60.70 per barrel on Monday, extending gains for a third consecutive session, supported by hopes that the record-long US government shutdown could end this week and by robust demand for fuels such as petrol and diesel. Gold climbed above $4 130 per ounce on Tuesday, reaching a three-week high as mounting economic uncertainty in the United States fuelled expectations of an imminent Federal Reserve interest rate cut.