Rand strengthens amid optimism over US trade agreements

The rand strengthened on Thursday, supported by renewed optimism surrounding global trade developments, trading at R18.17/$ at 17h45. This followed US President Donald Trump's announcement of a preliminary trade agreement with the United Kingdom, raising hopes for further deals with other major economies. Markets are also anticipating progress in the US-China trade talks scheduled for Saturday, which investors hope will help de-escalate ongoing trade tensions between the world’s two largest economies. Despite the stronger currency, the JSE closed 0.66% lower for the day.

In the US, equities rallied on Thursday following news of the US-UK trade framework, the first significant deal since the implementation of broad tariffs earlier in the year. The S&P 500 gained 0.58% closing at 5 663.94, the Nasdaq climbed approximately 1.07% ending at 17 928.14 and the Dow Jones Industrial Average rose by 254.48 points, driven by increased confidence in global trade and a reduction in geopolitical risks. US President Donald Trump hailed the UK deal as a major win for US exports, resetting the 10% tariff on UK goods. He also suggested that tariff reductions on Chinese goods could follow, depending on the outcome of weekend negotiations in Switzerland.

Oil prices advanced, with WTI crude rising 3.20% to close at $59.90 per barrel, boosted by optimism over upcoming US-China trade talks—two nations central to global oil consumption. Hopes were lifted after it was announced that US Treasury Secretary Scott Bessent would meet with China’s top economic official on 10 May 2025, in Switzerland in an attempt to resolve the trade dispute.

European stocks closed mostly higher, despite the FTSE 100 in the UK reversing earlier gains to close at 8 525.33, down 0.40%. This came as the UK and US confirmed a trade agreement and the Bank of England cut interest rates. The STOXX 50 rose by 1.10%, while the broader STOXX 600 climbed 0.40%, with pharmaceutical losses capping broader gains. The US-UK trade deal kept existing US tariffs on UK goods in place, while the EU threatened to impose tariffs on American products should ongoing negotiations fail. 

In Asia, market sentiment improved. Japan’s Nikkei gained 0.41% to close at 36 928.63, recovering from earlier losses, led by a rebound in technology stocks after Wall Street’s overnight rally. The Hang Seng Index also climbed 0.40% to close at 22 776, marking its sixth consecutive session of gains, buoyed by growing optimism over trade developments.