South Africa's rand, stocks tumble on U.S. jobs report

JOHANNESBURG (Reuters) - South Africa's rand weakened against the dollar and stocks tumbled on Friday as stronger United States jobs data bolstered the case for a rate hike by the Federal Reserve at next week's policy meeting. Mining firms were hit hard by falling commodity prices, breaking a two-day winning streak at the stock market. At 1600 GMT the rand extended losses, weakening more than 2 percent to 13.8500 per dollar compared with its previous close of 13.5645. Nonfarm payrolls rose less than expected to 173,000 in August, but a drop in the unemployment rate to a near 7-1/2-year low of 5.1 percent and an acceleration in wages kept alive prospects of a Fed interest rate hike later this month. The upwardly revised July nonfarm payrolls figure sent the rand into volatile territory, breaking the rand's resistance. "The problem for emerging market currencies is that the Fed, if it does hike, will not be doing so against a backdrop of particularly impressive growth," said Dominic Bunning, a senior forex strategist at HSBC Bank. As expectations for the Fed tightening rise, it squeezes the supply of liquidity globally. The tighter U.S liquidity weighs on emerging market currencies which have to fund current account deficits through capital inflows, said Bunning. With a wide current account deficit, weak economic growth and slowing China, Africa's most advanced economy is more vulnerable to these volatile capital funding shifts. On the back of a weaker rand, yields on government bonds rose across the curve with the benchmark 2026 issue up 1 basis points at 8.575 percent. On the stock market, the benchmark Top-40 index ended 2.88 percent lower at 43,547 points and the All-share index, the broadest measure of the South African stock market performance, lost 2.6 percent to 49,102 points. Mining firms were hit hard by falling commodity prices including Anglo American Platinum 8.12 percent to 322.50 rand while slumped Kumba Iron Ore slipped 7.2 percent to 85.87 rand. African Rainbow Minerals lost 4.3 percent to 66 rand after the company said full-year earnings more than halved due to softer prices. "Commodities in general are having an uphill battle surviving at this stage because of the concerns over growth in China and there is also oversupply," said Ryan Woods, a trader at Independent Securities.