31 May 2019
The rand closed at R14.56 to the greenback on Friday afternoon.
The day's range was between R14.53 and R14.85.
TreasuryONE said earlier that overnight news of Trump threatening Mexico with import tariffs over illegal migrants drove the peso considerably weaker and pulled the rand with it.
31 May 2019
OVERVIEW: US stocks sank to fresh 12-week lows and Treasuries rallied a fourth day as the Trump administration’s trade spats intensified, rattling financial markets already on edge over the strength of global growth. The S&P 500’s May decline topped 6% and the Dow Jones Industrial Average sank deeper into its longest streak of weekly losses since 2011 after President Donald Trump threatened to place escalating tariffs on Mexico and China prepared a blacklist of foreign companies it accuses of damaging its interests.
The Mexican peso tumbled more than 2%, while the yen jumped. Bund yields sank to a record as investors sought havens. Among the main trade-related moves: Carmakers in the S&P 500 plunged 3.8%, with General Motors off 4.3%. Kansas City Southern sank 6.5%, most since November 2016. The Mexican peso fell 3% and the yen jumped 0.7%. Costco Wholesale lost 2.8%, pacing a rout in food retailers. Whirlpool slid 3.6% to lead appliance makers lower.
West Texas Intermediate crude plunged 3%. The 10-year Treasury rate slid below 2.2% for the first time in 20 months, and a key portion of the yield curve inverted further, adding to investor angst over the threat of a recession. The credit market’s fear gauges moved by the most in almost three weeks to show the riskiest high-grade and junk bond markets since January.
"When you get a piece of bad news, you take a breath and you try to understand is it as bad as it seems. This one seems pretty bad," Steve Chiavarone, a portfolio manager with Federated Investors, said in an interview at Bloomberg’s New York headquarters. "There’s just a level of unpredictability that was introduced last night that I don’t think is helpful to the markets."
The latest move by the self-described Tariff Man would put 5% American duties on all Mexican imports on June 10, rising to 25% in October unless Mexico halts "illegal migrants" heading to the US. Evidence emerged Friday that economic growth is holding up when a crucial measure of US inflation watched by the Federal Reserve picked up in April for the first time this year and Americans’ spending and incomes topped forecasts. Trump’s Mexico declaration and a Bloomberg report that China is planning to restrict rare-earths exports leave markets set for a turbulent end to what’s been a rough month for global stocks.
Treasuries have benefited from haven demand, with yields on 10-year notes down to 2.18% Friday compared with 2.50% at the start of the month. Elsewhere, gold climbed to a two-week high while oil slumped to less than $56 a barrel in New York amid concerns about global demand.
These are the main moves in markets:
The S&P 500 Index declined 1.3% at 09:53 in New York. The Dow average lost 1.2% and the Nasdaq 100 slid 1.3%. The Stoxx Europe 600 Index plunged 1.2% to the lowest in 15 weeks. The Shanghai Composite Index fell 0.2%. The MSCI Emerging Market Index gained 0.1%.
The Bloomberg Dollar Spot Index climbed 0.3%, the highest in more than five months. The euro advanced 0.2% to $1.1148, the first advance in a week. The British pound decreased 0.2% to $1.2577. The onshore yuan declined 0.1% to 6.91 per dollar.
The yield on 10-year Treasuries decreased four basis points to 2.18%, hitting the lowest in almost 21 months with its fifth straight decline. The yield on two-year Treasuries declined five basis points to 2.01%. Germany’s 10-year yield fell two basis points to -0.20%, the lowest on record. Japan’s 10-year yield declined two basis points to -0.094%, the lowest in almost three years.
West Texas Intermediate crude decreased 2.1% to $55.41 a barrel, the lowest in more than 15 weeks. Iron ore fell 1.2% to $96.68 per metric ton, the lowest in more than a week. Gold gained 0.6% to $1,296.72 an ounce, the highest in more than two weeks. - Bloomberg
31 May 2019
Emerging-market scorecard favours growth stars as trade war bites
The Philippines and Egypt have surfaced as the most resilient among emerging markets amid the trade-war angst, a Bloomberg analysis shows.
Most of the top-ranked countries have robust economic-growth outlooks, according to a Bloomberg scorecard of 21 developing economies. The Philippines and Egypt scored higher as recent sell-offs across developing markets have left their assets relatively undervalued.
By contrast, Mexico, which now faces a fresh tariff threat from President Donald Trump, is at the bottom as the most vulnerable market due to its large exports to the US.
“The economies that have either strong domestic demand, smaller trade exposure to China or the US, or those with more restrictions for foreign investors to access the markets are more insulated,’’ said Satoru Matsumoto, Tokyo-based fund manager at Asset Management One Co., which oversees more than $500bn. “It’s understandable that countries like Mexico that are more vulnerable to a US. slowdown and also traded as a proxy for emerging markets are ranking lower.” - Bloomberg
31 May 2019
Competition Commission recommends go-ahead for Absa, Société Générale deal
The Competition Commission has recommended to the Competition Tribunal that it give the green light to a proposed merger that will see Absa acquiring target assets from Société Générale.In a statement issued on Friday morning, the Commission said it would recommend approval without conditions.
31 May 2019
Stocks slide as trade threats escalate
Adam Haigh and Yakob Peterseil, Bloomberg
US equity futures slumped on Friday as the trade-war rhetoric heated up, with Beijing saying it was ready to restrict the sale of rare-earth minerals to America and President Donald Trump threatening to place escalating tariffs on Mexico.
Treasury yields sank to a fresh 20-month low. The new front with Mexico and the threat of retaliation from China sent S&P 500 futures heading for their worst week since the global market rout in December.
The Stoxx Europe 600 Index declined, with all sectors in the red, led by carmakers. Equities fell in most of Asia, though the magnitude of the declines eased as trading progressed.
The latest move by the self-described Tariff Man would put 5% American duties on all Mexican imports on June 10, rising to 25% in October unless Mexico halts “illegal migrants” heading to the US. The Mexican peso tumbled more than 2%, while the dollar jumped.
“We are seeing a Trump who is going all-out,” said Kay Van-Petersen, global macro strategist at Saxo Capital Markets Pte. “This raises the bar not just for Mexico and Canada, but also for China.”
Trump’s Mexico declaration and plans from China to push back on rare earths leave markets set for a turbulent end to what’s been a rough month for global stocks. Treasuries have benefited from haven demand, with yields on 10-year notes down to 2.17% Friday compared with 2.50% at the start of the month.
Speaking before the Mexico tariff news, Federal Reserve Vice Chairman Richard Clarida said the US central bank is prepared to ease monetary policy if it sees mounting risks to the US expansion, though he stressed the economy was in a “very good place” with unemployment low and inflation muted.
Further bad news on global growth came Friday with China’s manufacturing PMI coming in below estimates. The focus now turns to US data on personal income and spending as well as prices due Friday. Elsewhere, oil slumped below $56 a barrel in New York amid concerns about global demand.