South African rand weakens as factory sentiment weakens as oil boom reduces risk appetite

JOHANNESBURG, June 1 (Reuters) – The South African rand weakened on Monday after a survey showed factory sentiment eased in May, while higher oil prices dampened risk appetite.

• At 1313 GMT, the rand traded at 16.3151 against the dollar, down about 0.6% from its previous close.
• South Africa's factory sentiment eased in May due to a slowdown in activity and demand, although it remained in expansion territory for the second consecutive month.
• “In April, manufacturers benefited from bringing forward demand in anticipation of further increases in costs, but this effect was mitigated in May,” South African bank Absa said in a statement on its sponsored purchasing managers' index (PMI).
• Oil prices rose more than 3% after Iran and US trade strikes and Israel ordered troops to advance into Lebanon.
• The rand has been at the mercy of global market sentiment since the Iran war began in late February.
• “For now, the rand will continue to use oil prices as its compass and look to the Middle East for further guidance on direction,” ETM Analytics said.
• Data from South Africa's auto association NAAMSA showed new vehicle sales rose 12.8% year-on-year in May, up from a 13% annual increase recorded in April, as consumer confidence supported demand despite rising global volatility and cost pressures.
• “May's sales performance shows the market is benefiting from the momentum established at the beginning of the year, even as a more uncertain macro-economic environment is testing the foundations of that recovery,” the Automotive Business Council said in a statement.
• The top-40 index on the Johannesburg Stock Exchange was down about 1.1%.
• South Africa's benchmark 2035 government bond weakened, with the yield rising 4 basis points to 8.425%.