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Markets WRAP: Rand closes at R14.89/$

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13 Jun 2019

The rand closed at R14.89 to the greenback on Thursday afternoon.

The day's range was between R14.82 and R14.93.

TreasuryONE said earlier that the rand had lost all of its gains and opened far weaker on Thursday morning while Peregrine Treasury Solutions's Bianca Botes said that US President Donald Trump was fuelling currency jitters yet again.

"Just when you think that emerging markets finally have a chance to regain some momentum, President Trump moves in," said Botes. "Not even an 'extremely beautiful letter' from Chinese president Xi could deter Trump from once again fuelling the trade war jitters, categorically stating that unless China agrees to a few contentious matters, a trade agreement will not be reached.

"Retail and manufacturing data point to a recovery in the local economy in Q2 2019, however calls for the SARB to cut rates are intensifying, which is also not doing the rand any favours.

"Currency markets largely hinge on the US president’s Twitter account and once again we are looking towards China and the US to ease market fears."

13 Jun 2019

The pound whipsawed as Brexiteer Boris Johnson took a commanding lead in the first round of voting to elect a new British prime minister. Sterling initially fell on the result before recovering some ground, with the market already anticipating a Johnson win and some of the other euroskeptic candidates being eliminated.

A gauge of price swings over the next week has climbed the most since early May, as traders anticipate moves on the leadership contest and the Federal Reserve decision next week. Traders see higher chance of price swings as Tory leadership contest continues.

"Boris will very much likely be in the final two and become the prime minister if it goes to a vote of Tory members," said Jordan Rochester, a currency strategist at Nomura International. "But the price action shows that this is a crowded market in short sterling now and even consensus non-events lead to small rallies."

Investor positioning has turned increasingly short on sterling over the past month, according to data from the Commodity Futures Trading Commission. The Conservative leadership election is adding yet more uncertainty, with several candidates including Johnson saying they will seek to take the UK out of the European Union if a deal cannot be reached by the current deadline of October 31.

The pound was little changed at $1.2686 by 14:37 in London, after swinging between gains and losses of 0.2%. It remains the worst-performing currency among peers in the past month. Following Thursday’s voting, there are seven candidates remaining in the running to replace Theresa May. Johnson gained 114 votes, well ahead of Foreign Secretary Jeremy Hunt on 43 and Michael Gove on 37, with Brexiteers Andrea Leadsom and Esther McVey knocked out.

The next round will take place on Tuesday and the hopefuls will be whittled down to a final pair later this month to be voted on by Conservative party members. While the results are overwhelmingly in favor of Johnson, they may help the pound consolidate as candidates with a softer line on Brexit are in second and third place, suggesting the choice may still be between a deal and a no-deal Brexit supporter, according to Credit Agricole SA strategist Valentin Marinov. - Bloomberg

13 Jun 2019

The rand gave up all of its gains on Tuesday and began the day trading weaker at R14.92.

By 12:37, the rand was changing hands at R14.85 to the greenback.

"There appears to be no single factor that caused the rand to slide like it did but EMs are softer and the dollar is slightly stronger. Retail sales data out yesterday was up 2.4% versus an expected 1.2% and today we have Mining and Gold production numbers out.

"US inflation data yesterday was below expectations and reinforced the case for a rate cut in the US. Treasury yields fell on the news with the 10y bond now at 2.11% and the 30y at 2.605%.

"Stocks in the US as well as Asia closed lower, driven by a fall in tech stocks and concerns over the protest action in Hong Kong. Markets are not expecting any news on the trade war front until the G20 at the end of the month and are expected to trade in fairly narrow ranges until then. Gold is holding at $1 335.00 levels while Oil is softer at $60.25." 

13 Jun 2019

Diversified construction company Group Five has received an extension from its creditors in terms of publishing its business rescue plan. 

The construction group was set to publish its plan on April 16. This has now been extended to June 28. 

"We can confirm that the vote was unanimous and all creditors agreed to the extension of the date," it said in an update to shareholders on Thursday. 

The group commenced business rescue proceedings on March 11, and said previously it would need to pay out an estimated R233m in severance pay. 

Group Five budgets for R233m in retrenchment pay as it enters business rescue

13 Jun 2019

Asian stocks, US futures slip 

Adam Haigh, Bloomberg

Stocks in Asia dropped with US futures as investors assessed ongoing trade tensions alongside data that played into the hands of those gunning for looser US monetary policy.

The yen and Treasuries gained as risk-off sentiment picked up. Equities fell for a second day, though declines were pared in Tokyo and Hong Kong.

European futures signalled a weaker open.

Treasury yields ticked lower after a weak inflation report bolstered the case for Federal Reserve interest-rate cuts.

The slump in oil eased after supply concerns sent crude tumbling Wednesday. U.S. President Donald Trump said he had no deadline for China to return to trade talks, other than the one in his head.

Trump has threatened to raise tariffs on Chinese goods if President Xi Jinping doesn’t meet with him at the Group of 20 summit later this month in Japan.

Commerce Secretary Wilbur Ross played down the chance of a meeting and stepped up the administration’s criticism of the Fed, urging the central bank to reconsider December’s rate hike.

In the latest sign of demand for safe-haven assets, an auction of 10-year bunds Wednesday drew an average yield of minus 0.24%, the lowest on record.

“Even though the Fed is still on investors’ side, some of the slowdown in international economies and the uncertainty over trade makes risk-reward at this level somewhat mixed,” Chris Konstantinos, chief investment strategist at Riverfront Investment Group, told Bloomberg TV. “We have actually taken in risk a little bit recently.”

13 Jun 2019

Sygnia cites 'reputational risk' as it parts ways with auditors Deloitte

Asset management company Sygnia announced on Wednesday that it had parted ways with its external auditors Deloitte. 

In an update to shareholders the company said its directors decided at a meeting in May to look for "alternative external auditors given our unsatisfactory engagement with Deloitte and the reputational risk associated with the firm".

Deloitte, meanwhile, said Sygnia's statement contained "factual inaccuracies" and promised to provide more information "in due course".  

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