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Markets WRAP: Rand ends day level at R13.85/$

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21 Jan 2019

The rand was almost unchanged against the dollar on Monday at 17:00, while the JSE ended half a percent firmer. 

The local currency opened the day's trade at R13.84/$ and finished at R13.85/$. 

The JSE, meanwhile, ended 0.56% firmer after a good showing by the Industrials index, which rose by 1.5%. 

The Financials index was down 0.4% and the Resources index level.  

21 Jan 2019

The rand was trading weaker against the dollar, while the JSE All Share was up by late afternoon on Monday. 

The local currency opened at R13.84/$ and was changing hands at R13.87 to the greenback at 16:30. 

The JSE All Share index was up 0.71% at 54 114 points, while the Top 40 was 0.85% firmer at 47 989.

21 Jan 2019

IMF warns of no-deal Brexit risks 

The International Monetary Fund renewed its warning about the risks to the UK’s economic outlook if Britain leaves the European Union without a deal.

The Washington-based lender held its 2019 growth forecast at 1.5%, saying the fiscal stimulus announced in the October 29 budget would likely help offset the dampening effect which Brexit fears are having on the world’s fifth-biggest economy.

However, "substantial uncertainty" surrounds the estimate."This baseline projection assumes that a Brexit deal is reached in 2019 and that the UK transitions gradually to the new regime," the IMF said in its World Economic Outlook Update on Monday. "However, as of mid-January, the shape that Brexit will take remains highly uncertain."

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21 Jan 2019

London stocks rise, pound lower before Brexit 'Plan B'

London's stock market climbed Monday, aided by a falling pound, with traders awaiting the UK government's Brexit "Plan B" after the country's parliament voted down Prime Minister Theresa May's original EU divorce deal.

The eurozone's top stock markets dropped, while Asian indices closed higher.

There was mixed news out of China, with official data showing the country's economic growth at its slowest pace in 28 years offsetting a report that the country has offered to eliminate its massive trade surplus with the United States - easing trade war tensions between the world's two biggest economies.

In Europe, "the pound has come under some early pressure at the beginning of the week as Prime Minister Theresa May gets set to outline her so called Plan B", noted Michael Hewson, chief market analyst at CMC Markets UK.

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21 Jan 2019

Poor earnings season may not stop a market rally, JPMorgan says

The coming earnings season is likely to be ugly, but that may not be taken badly by an equity market that’s already anticipating negative news, according to JPMorgan Chase & Co.

Particularly weak activity indicators in Europe suggest the coming season is likely to be challenging and below consensus estimates, according to strategist Mislav Matejka, who has cut his expectations for the region’s earnings-per-share growth by 3% for the year.

Yet Matejka still forecasts European equities will return 10% by the end of 2019, saying the market doesn’t necessarily need to see some earnings growth to find a floor.

He sees similarities to 2016, when equities bottomed in February, 10 months before EPS revisions turned positive.

MORE HERE

21 Jan 2019

Rand trading at R13.88/$ by midday

The rand which opened at R13.84/$ on Monday morning was trading at R13.88/$ by midday.

The currency ended the last week on the back foot, having enjoyed gains for most of the week 

"With the dearth of data and news events in the market, we expect the latest move in the rand is more a case of the rand running out of steam and a period of consolidation is on the cards," Andre Botha, senior dealer at TreasuryONE noted in a market update.

"Compared to other EM's we traded as the weakest EM currency on Friday.

"Normally the rand is a proxy currency for EM's and this could be an early hint that EM's could slide a little in the next week. However, the US-China optimism cloud is still hovering over EM's in general.

"The true test of whether the Rand has completely run out of momentum would be when the US is back in the market after celebrating Martin Luther King day today," he said.

"With the US being out of the market we expect a very tight trading day for the rand with no real direction in the market."

21 Jan 2019

European stocks dip at open

European stocks eased at the open Monday, with traders awaiting the UK government's Brexit "Plan B" after the country's parliament voted down Prime Minister Theresa May's original EU divorce deal.

London's benchmark FTSE 100 index dipped 0.1% to 6 964.28 points - its heavyweight mining sector knocked by news China's economy grew at the slowest pace in 28 years.

In the eurozone, Frankfurt's DAX 30 index shed 0.3% to 11 176.12 points and the Paris CAC 40 lost 0.2% to 4 865.79.

21 Jan 2019

Stocks mixed as investors digest latest on trade

European stocks and US equity futures dipped Monday while Asian markets posted modest gains as investors assessed a mixed bag of headlines on the economy and trade.The dollar was steady, while European bonds mostly drifted.

The Stoxx Europe 600 Index headed for the first drop in five days, tracking S&P 500 futures lower on what is a holiday in America.

Shares in Tokyo, Hong Kong and Sydney all climbed on lingering optimism for the next round of US-China trade talks at month-end and as data from Beijing alleviated some concerns of a continued deterioration in the world’s second-largest economy.

READ MORE

21 Jan 2019

The week ahead

In terms of the weak ahead, world leaders will descend on Davos this week for the World Economic Forum, economist of RMB Global Markets research Mpho Tsebe noted in a market update on Monday.

Theresa May is also scheduled to present her plan B for Brexit to Parliament after her initial proposal lost by a 230-vote margin last week.

With the US markets closed for Martin Luther King Jr. Day, trading is likely to be thin today.

Locally, the key data releases this week will be the CPI print for December and the FNB/BER Consumer Confidence data for 4Q18.

We expect headline inflation to have moderated to 4.5% y/y in December from 5.2% in November attributed to the R1.84/litre cut in the price of 93 octane unleaded petrol.

Consumer confidence is likely to remain flat or show a marginal improvement depending on the timing of the survey as the positive news of two consecutive petrol price cuts are likely to have been offset by the 25bp interest rate hike in November.

Meanwhile, analysts from NKC Economics forecast inflation to be 4.4% in December, down from 5.2% reported in November. 

"December is a high survey month, but the main driver will be the hefty fuel price declines (petrol down by R1.84/litre and diesel by R1.45/litre)," NKC noted.

On Thursday, consumer confidence figures are due for release.

"The historically high consumer confidence in H1 was unsustainable due to the economy slipping into a technical recession in Q2, renewed rand weakness, large consecutive fuel price increases and some continued domestic policy uncertainty," NKC said.

May is said to give up on cross-party talks to fix Brexit

21 Jan 2019

Currency ghosts fade as emerging-market central banks stand pat

South Korea and Malaysia may provide further evidence this week that emerging-market central banks have successfully vanquished the currency crises of 2018, with policy makers in both countries forecast to hold interest rates steady.

Turkey, Indonesia and South Africa all kept rates on hold last week, underscoring how tighter monetary policy in many developing economies is keeping the lid on inflation, part of a mix that’s helping to fuel stocks, bonds and currencies.

Despite gains that drove the MSCI’s stocks index to its longest stretch of weekly gains in a year, the trade war risks haven’t disappeared, as a string of Chinese data releases on Monday showed the impact of the trade dispute.

MORE HERE

21 Jan 2019

Asian markets post fresh gains, China growth slows to 28-year low

Asian markets on Monday built on last week's rally as investors cheered a report that China had offered to eliminate its massive trade surplus with the United States, while data showed Chinese economic growth hit forecasts in 2018.

Regional equities picked up where they finished Friday after Bloomberg said Beijing had pledged to ramp up spending on US goods over the next five years.

While there was some scepticism over the offer, observers said it indicated that talks between the economic superpowers were heading in the right direction.

Continue reading

21 Jan 2019

Emerging-market equities post longest rally in a year

Emerging-market equities rose for a fourth week last week as signs of easing trade tensions supported the appetite for riskier assets. Currencies dropped amid a stronger dollar.

FULL STORY

21 Jan 2019

The rand started the day at R13.84/$.

"A less hawkish SARB, coupled with a slowdown in Chinese GDP to 6.4%, are currently the main factors weighing on the performance of the rand," corporate treasury manager at peregrine Treasury Solutions Bianca Botes said in a market update.

"While the violent protests taking place in our northern neighbour is not affecting the local currency market, fears of a spillover and an additional rush of migrants are some of the top concerns from a socio-economic perspective that could further strain the already weak local economy," she excplained.

Further ashore, markets will be aware of British Prime Minister Theresa May as  she tries to break the Brexit deadlock after surviving the vote of no confidence last week.

"Ongoing instability in the region will continue to assist the ZAR against the GBP in the firming trend witnessed since Oct 2018."

The US-China trade dynamic still remains pivotal in the emerging market environment, Botes added.

The rand is expected to trade within range of R13.69 to R13.94 expected.

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Rand - Dollar
14.72
-0.8%
Rand - Pound
20.27
-1.0%
Rand - Euro
17.07
-0.7%
Rand - Aus dollar
11.04
-1.0%
Rand - Yen
0.13
-0.3%
Gold
1,786.73
-1.2%
Silver
23.97
-2.6%
Palladium
2,004.59
-2.6%
Platinum
1,031.26
-3.0%
Brent Crude
85.99
+0.5%
Top 40
60,888
+1.2%
All Share
67,436
+1.2%
Resource 10
63,809
+0.5%
Industrial 25
86,606
+1.7%
Financial 15
13,973
+1.2%
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