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South African assets soar after unity government confirmed, Fed talks ahead

SOUTH African assets gained, building on momentum after unity government members were confirmed last week and ahead of talks by U.S. Federal Reserve officials later in the day.

South Africa’s National Assembly sat for the first time on Friday after last month’s election, where Cyril Ramaphosa of the African National Congress was re-elected as president. Ramaphosa’s swearing-in will take place on Wednesday.

At 1511 GMT, the rand traded at 18.09 against the dollar, about 9% stronger than its previous close.

“The domestic currency saw volatility around South Africa’s elections on investor uncertainty but has now strengthened … as the establishment of a new government has proceeded peacefully and successfully,” Investec’s chief economist Annabel Bishop said in a research note.

Six political parties have signed up to join a government of national unity including the pro-business Democratic Alliance which is favoured by markets, after the ANC lost its majority in the vote.

On the Johannesburg Stock Exchange, the blue-chip Top-40 (.JTOPI) index gained, ending 3.3% higher, while the broader all-share (.JALSH) index closed up 3.5%.

South African shares were propped up by the banking sector (.JBANK), which was up 7.34%.

“At long last sa (South Africa) shares are flying … Political situation most welcomed by Market,” Wayne McCurrie, portfolio manager at First National Bank, said on X.

South Africa’s benchmark 2030 government bond was also stronger, with the yield down 26 basis points to 9.865%.

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“With South Africa’s election outcome seen as promoting stability, democracy and unity, financial markets attention will likely turn to the U.S. interest rate cut timing,” Bishop added.

Traders will on Tuesday look for hints from Fed officials on the future interest rate path of the world’s biggest economy.

By The African Mirror