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Markets WRAP: Rand closes at R14.76/$

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02 Aug 2019

The rand closed at R14.76 to the greenback on Friday afternoon.

The day's range was between R14.57 and R14.76.

02 Aug 2019

OVERVIEW: US stocks and Treasuries whipsawed as investors sought clarity on the latest trade policy from the Trump administration. The dollar advanced. S&P 500 contracts pared losses as traders sifted through reports on the latest trade discussions after President Donald Trump said Thursday he would slap new tariffs on Chinese goods.

Earlier, futures were lower after US employers added jobs generally in line with expectations and wage data showed gains. Benchmark two-year bond yields traded near the lowest level since 2017, while the dollar turned higher against major currencies.

European and Asian stocks slumped and bonds rallied after China pledged “countermeasures” if the US steps up tariffs on its goods. “If you want to put a multiplier to this week’s events - the tariff has a 100 next to it, and the jobs report has a 2 next to it,” Michael Antonelli, an institutional equity sales trader and managing director at Robert W. Baird & Co said.

“We were at 2 943 for the S&P futures pre-report, we’re at 2 939 now. People would point to a wage component being a positive, but it’s only a very small beat that would be what bulls on the economy would point to. But I don’t see it enough in this to change people’s perception on what’s going to happen in September. Average hourly earnings aren’t at a point where inflation is a real issue.”

The jobs report adds another piece to an already large puzzle that includes the Fed, earnings and trade. While China has yet to offer details on what measures it would take, the sudden escalation of the spat has put markets in a spin in an already action-packed week of corporate earnings and central-bank meetings. The developments come after the Federal Reserve chief cast doubt about a long cycle of interest-rate cuts, provoking the president’s ire and disappointing many investors.

Elsewhere, crude oil clawed back some of its 8% slide on Thursday. Gold gave up some of the previous day’s gains. Most European government bonds rose alongside the common currency. The pound drifted after a by-election loss reduced UK Prime Minister Boris Johnson’s House of Commons majority to a single seat.

Stocks

Futures on the S&P 500 Index dipped 0.2% as of 09:13 New York time. The Stoxx Europe 600 Index sank 1.8%, the biggest tumble in eight months. The UK’s FTSE 100 Index sank 1.8%, the largest tumble in 19 weeks. The MSCI Asia Pacific Index sank 1.4%, the lowest in more than six weeks.

Currencies

The Bloomberg Dollar Spot Index rose 0.9%. The euro was steady at $1.1085. The British pound fell 0.1% at $1.2122. The Japanese yen climbed 0.5% to 106.78 per dollar.

Bonds

The yield on 10-year Treasuries dipped three basis points to 1.87%. Britain’s 10-year yield declined four basis points to 0.553%. Germany’s 10-year yield declined four basis points to -0.49%, reaching the lowest on record.

Commodities

Gold dipped 1.1% to $1,448.80 an ounce.West Texas Intermediate crude climbed 2.2% to $55.15 a barrel. - Bloomberg

02 Aug 2019

Francois Groepe appointed deputy CEO at Discovery Bank

Former Deputy Reserve Bank Governor Francois Groepe has been appointed deputy CEO at Discovery Bank. Discovery Bank announced Groepe's appointment in a statement late on Thursday.

His term is effective from August 1.

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02 Aug 2019

Oil set for loss after biggest slump in 4 years on Trump tariffs

Heesu Lee, Bloomberg

Oil is set for a weekly loss after the steepest one-day drop in more than four years as President Donald Trump abruptly escalated the trade war with China, stoking concerns over slowing growth.

While futures in New York rebounded on Friday, prices are still far from recovering the 7.9% slump on Thursday, the most since February 2015. Trump said 10% levies will be imposed September 1 on $300 billion in Chinese goods after a round of trade talks on Wednesday ended without a breakthrough.

The threat compounded fears about declining American manufacturing activity after the Federal Reserve dashed prospects for serial rate cuts to boost growth.

Oil last month capped its smallest monthly move since 1991 as it was caught between concerns global demand may slow and fears crude flows from the Middle East may be disrupted. OPEC’s output slid in July to the lowest in five years as US sanctions on Iran crimped exports from the Persian Gulf nation.

Trump’s “latest comment definitely raised the prospect of the dispute extending for longer,” said Kim Kwangrae, a commodities analyst at Samsung Futures. “Given the wider concern over slowing growth has already been reflected in prices, it remains to be seen whether oil will fall further from here as we have geopolitical risks still lingering in the Middle East.”

02 Aug 2019

Shackles are off for EM central banks after Fed’s hawkish cut

A less-dovish-than-anticipated Federal Reserve was always the biggest danger, and markets voted accordingly after Chairman Jerome Powell’s comments yesterday.

The rand led Thursday's retreat among currencies as the dollar headed toward a more than two-year high, stocks on the MSCI emerging-market index fell for an eighth day to edge toward a break below the gauge’s 200-day moving average, and the sovereign bonds of Turkey, South Africa, Russia and Brazil were among the biggest casualties in the fixed-income world.

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