(Updates rand, bonds; adds stocks)
JOHANNESBURG, April 1 (Reuters) – South Africa’s rand extended gains against the U.S. dollar on Thursday, as positive manufacturing activity and new vehicle sales data pointed to a recovery in the economy.
At 1515 GMT the rand was 0.76% firmer at 14.6525 per dollar, making advances from the previous session that were spurred by a bigger-than-expected trade surplus.
On Thursday, a survey showed manufacturing activity expanded for a third month in a row in March. Separately, data showed new vehicles sales were up by nearly 32% in March.
“Previous data releases of private sector credit extension as well as vehicle and retail sales pointed towards sluggish consumer demand over the past few months,” Pieter du Preez at NKC African Economics said.
“Yet, the latest vehicle sales data is the first release suggesting that consumers are willing to start spending again.”
South Africa’s economy contracted by 7% in 2020, its worst annual decline in a century, after the COVID-19 pandemic disrupted economic activity.
Shares on the Johannesburg Stock Exchange (JSE) rallied on Thursday, ending the week on a higher note as financial markets in South Africa closed for a four-day long weekend.
The markets were buoyed on the back of stabilising U.S. treasury yields and a massive multi-trillion-dollar infrastructure package by President Joe Biden to boost local growth.
The benchmark all-share index went up 1.13% to end the day at 67,236 points while the bluechip top 40 companies index closed up 1.16% to 61,590 points.
“Everything in the last month or so has been driven by fears of what the U.S. long bond interest rate is doing…, because ultimately the share market is supported by low interest rates,” said Wayne McCurrie, portfolio manager at local bank FNB.
He said that whenever the markets turn sanguine about rates being stable, there is a bounce in share prices globally.
Bonds weakened, with the yield on the benchmark 2020 paper up 8 basis to 9.565%. (Reporting by Olivia Kumwenda-Mtambo and Promit Mukherjee, editing by Mark Heinrich)