Markets WRAP: Rand closes at R14.36/$

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25 Jun 2019

The rand closed at R14.36/$. Here's how Tuesday wrapped up: 

USDZAR 14.3565

EURUSD 1.1406

EURZAR 16.3668

GBPUSD 1.2745

GBPZAR 18.2882

AUDZAR 9.9857

CADZAR 10.8847

CNYZAR 2.0850

ZARJPY 7.4423

CHFZAR 14.7870

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25 Jun 2019

Group 5 has announced the resignation of its chairperson as well as other non-executive directors with immediate effect.

Chairperson and non-executive director Nonyameko Mandindi resigned as well as non-executive directors Michael Upton, Edward Williams and Cora Fernandez.

"The Board wishes to thank Nonyameko, Michael, Edward and Cora for their invaluable contribution to the Group since their appointments in July 2017 under challenging circumstances and take this opportunity to wish them well for their future," it said in a SENS announcement on Tuesday.

Group 5 is presently undergoing business rescue.

25 Jun 2019

The pound will tumble to levels not seen since 2017 against the euro as Brexit turmoil outweighs a dovish European Central Bank, according to analysts. Sterling is likely to slide toward 92 pence per euro by year-end, about 3% below current levels and a rate not seen in 21 months, according to JPMorgan Chase & Co.

That pessimism toward the currency is starting to be priced in the options market, where the cost of puts relative to calls is approaching the highest since April. 

The pound has slumped against the euro this quarter as the risks to Britain’s currency from the contest to replace UK Prime Minister Theresa May and October’s Brexit deadline mount. The slide reflects investors’ skepticism about the Bank of England’s stance that rates may have to rise if the economy develops in line with its forecasts. With momentum slowing around the world, markets are, in fact, pricing in the chance of a BOE rate cut next year.

“The pound still has more downside to it,” said Timothy Graf, head of EMEA macro strategy for Europe at State Street Bank & Trust. “The BOE has been talking way too upbeat a game given every other central bank in the world except Norway is talking about easier policy.”

Sterling has weakened about 3.5% since the start of April and traded around 89.20 pence per euro Tuesday. Six-month euro-sterling risk reversals, a measure of market sentiment and positioning, have moved increasingly in favor of the common currency since early May, suggesting investors are betting on further gains.On Monday, Boris Johnson, the front-runner in the ruling Conservative Party’s leadership race, reiterated he would take Britain out of the European Union without a deal on October 31 if necessary, even as some of his senior colleagues plotted to prevent him doing so.

The UK Parliament breaks for its summer recess in late July and doesn’t return until early September, meaning the deadlock could continue even after a new prime minister is in place.

“It’s difficult to see how the UK political fog clears up quickly, so there is little reason to buy even a cheap pound,” said Stuart Bennett, head of Group-of-10 currency strategy at Banco Santander SA. “And if the Fed continues to weigh on the dollar, the euro will be the winner by default.”

This environment means sterling shorts versus the euro will likely continue to build, according to Jeremy Stretch, head of Group-of-10 currency strategy at Canadian Imperial Bank of Commerce. He sees the pound weakening to 91.50 pence per euro by the fourth quarter. - Bloomberg

25 Jun 2019

Asian stocks retreat on geopolitical tensions

Cormac Mullen, Bloomberg

Most Asian stocks declined and US and European futures slipped Tuesday as traders mulled geopolitical strains and positioning for the upcoming US-China summit meeting.

Treasuries, gold and the yen pushed higher. Shares in China and Hong Kong led losses, with benchmarks in Tokyo, Seoul and Sydney reversing earlier gains.

Iran suggested new sanctions had closed off a diplomatic solution to the dispute with Washington, while US officials sought to play down expectations for a highly-anticipated meeting between President Donald Trump and China’s Xi Jinping.

Meanwhile, Bloomberg reported Trump has recently mused to confidants about withdrawing from a longstanding defense treaty with Japan that he thinks treats the US unfairly.

Shanghai and Hong Kong benchmarks dropped over 1%, with China Merchants Bank tumbling as much as 10%, as analysts cited a Washington Post report about a US investigation into sanctions violations with regard to North Korea.

Elsewhere, stock markets appear to have entered a holding pattern ahead of the G-20 summit in Japan, which presents a pivot point for trade relations between the US and China. Sentiment remains fragile as investors mulled tensions between the US and Iran.

On Tuesday, traders will keep a close eye on Federal Reserve Chairman Jerome Powell, who discusses monetary policy in a speech in New York.

It’s “a pretty good guess that we won’t see a whole lot of movement in front of the big upcoming meetings (G-20 and OPEC),” wrote Matt Maley, equity strategist at Miller Tabak & Co. “The results of those meetings should be quite important to the stock market’s next move.”

25 Jun 2019

TymeBank's CEO resigns for personal reasons

TymeBank announced on Tuesday that its Chief Executive Officer, Sandile Shabalala, had tendered his resignation for personal reasons, "the most important of which is to spend more time with his family".

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