Afternoon Note
06 September 2023
Support & Resistance Levels
Data This Week
Market Highlights
Market Close
South Africa
Global Markets
Overnight Headlines
Support & Resistance Levels
ZAR weakness continued with the unit testing above R19.3000/$ in early trading.
Today’s Market Support and Resistance Levels:
Data This Week
Monday
**US HOLIDAY
Tuesday
09H15 S&P SA PMI’S 49 F/CAST VS 48.2 pREVIOUS
11H30 SA GDP GROWTH RATE 1.1% YOY EXPECTED VS 0.2% PREVIOUS
16H00 US FACTORY ORDERS -2.5% EXPECTED VS 2.3% PREVIOUS
17H30 US TREASURY BILL AUCTIONS 3M AND 6M
Wednesday
16H00 US ISM SERVICES PMI 52.5 EXPECTED VS 52.7 PREVIOUS
Thursday
11H00 SA CURRENT ACCOUNBT R-178BN VS R-66BN PREVIOUS
14H30 JOBLESS CLAIMS 235K EXPECTED VS 228K
Friday
10H00 SA CONSUMER CONFIDENCE -28 F/CAST VS -25 PREVIOUS
Market Highlights
The Rand remained under pressure above R19/$ on the back of a rampant Dollar
Traders citing renewed inflation concerns after Oil prices spiked in New York and early European trading.
-
- The news that OPEC+ ( Saudi and Russia ) agreed to continue with output cuts for another few months totalling 1.3 million bpd,
sent prices higher with Brent reaching $90/bl.
- The news that OPEC+ ( Saudi and Russia ) agreed to continue with output cuts for another few months totalling 1.3 million bpd,
Both countries said they will review the decisions monthly to consider deepening cuts or raising production depending on market conditions.
Supporting the Dollar was better than expected data after Factory orders fell less than expected last month.
Today’s key report being US ISM Services PMI due at 16H00 with 52.5 expected.
A higher print likely to advance the dollar and a lower print will reverse recent gains.
Traders will also keep a close eye on speeches from several Fed officials this week.
Governor Wallace stated on Tuesday that the Fed can proceed carefully with rate hikes.
Technically we remain above R19.000/$ and a break of R19.3000/$ opens up R19.50/$.
Long Dollars , add above R19.3000/$
Market Close
DOW
-195 to 34,641
SP500
-18 to 4,496
NASDAQ
-10 to 15,463
Overnight Trading
image: Trading economics
South Africa
ENERGY CRISES
Electricity Minister Ramokgopa has attributed the current round of Stage 6 load shedding to ramped up planned maintenance overlapping with unplanned breakdowns at several power plants.
By the end of the week, however, lower stages of load shedding are anticipated.
The minister and Eskom officials on Tuesday gave an update on the status of the grid, after the power utility announced it would implement Stage 6 load shedding until further notice.
“The Stage 6 load shedding, we are experiencing now is largely due to us ramping up planned maintenance and unplanned capacity loss factors” Ramokgopa said.
Source: EWN.
JOHANNESBURG CBD
ANOTHER CBD explosion.
On Tuesday, an explosion that injured five people occurred in Braamfontein while Egoli Gas employees were conducting maintenance on its pipelines.
The explosion the second to hit the inner city in just two months.
Emergency Management Services (EMS) said Egoli Gas employees were conducting maintenance on its pipelines when the blast occurred during peak hour traffic on Tuesday.
Five people were injured, while a truck and a building close to the Nelson Mandela Bridge caught fire.
This was the second blast to hit the city in just two months.
Global Markets
Stocks
Yesterday, the major averages ended lower during Tuesday’s regular session, as higher oil prices and global economic uncertainties weighed on sentiment.
In regular trading on Tuesday, the Dow fell 0.56%, the S&P 500 lost 0.42% and the Nasdaq shed 0.08%.
Meanwhile, energy and technology firms outperformed the market.
Those moves came as oil prices jumped after Saudi Arabia and Russia extended their voluntary supply cuts, sending the energy sector higher but stoking fears of stronger inflation.
Rising treasury yields also pressured equities.
Source: Trading economics
Bonds
The yield on the US 10-year note continued to march higher to above 4.2% as traders reassess the monetary policy outlook.
Data for the US continue to point to a resilient economy, and analysts are becoming increasingly convinced a recession can be avoided.
Factory orders fell less than expected last month and the ISM Services PMI due Wednesday will be keenly watched for further updates.
Traders will also keep a close eye on speeches from several Fed officials this week.
Governor Wallace stated on Tuesday that the Fed can proceed carefully with rate hikes.
Source: CNBC
Overnight Headlines
Asian Markets
Asian equities mixed after weaker Chinese PMI’S.
In Japan, the Nikkei 225 climbed 0.62% to close at 33,241, rising for the eighth consecutive session.
A weakening yen boosted the profit outlook for export-heavy Japanese companies and made domestic assets more attractive to foreign investors.
Meanwhile, traders remain cautious about stronger oil prices that could add to inflationary pressures, as well as higher US Treasury yields.
Nearly all sectors participated in the advance, with strong gains from index heavyweights.
Source: EWN
Energy
Oil prices higher again!
Brent crude futures held above $90/bl on Wednesday after hitting over ten-month highs.
Traders citing OPEC+ majors Saudi Arabia and Russia extended their voluntary supply cuts through the rest of the year.
Saudi Arabia announced that it will extend its voluntary output cut of 1 million barrels per day for another three months until the end of December to stabilize and balance oil markets.
Russia also extended its voluntary reduction in oil exports by 300,000 bpd until the end of the year.
Both countries said they will review the decisions monthly to consider deepening cuts or raising production depending on market conditions.
Source: Gulf News
Metals
Precious metals drifting lower.
Gold held below $1,930/oz on Wednesday, weighed down by a strong dollar as heightened global economic uncertainties spurred safe-haven demand for the greenback.
The metal also faced downward pressure from rising Treasury yields as investors continued to assess the likely direction of US monetary policy.
Fed Governor Christopher Waller said the latest batch of economic data bought the US central bank some time as it decided whether additional interest rate hikes are needed to control inflation.
Still, bullion prices remained close to one-month highs as easing inflation and soft jobs data in the US raised hopes that the Fed is done tightening this year.
Markets are betting that the US central bank will hold rates steady in September and see a greater chance of no additional hikes this year.
Source: KITCO
Currencies
Dollar higher on the back of risk off sentiment.
The dollar index strengthened above 104.7 on Wednesday.
The buck hovering at its highest levels since mid-March, driven by a risk-off sentiment and rising Dollar yields.
For now, the Fed is expected to maintain interest rates steady this month, and the likelihood of a 25bps increase in November currently stands at 36%.
The dollar strengthened against all major currencies, after the Reserve Bank of Australia kept interest rates unchanged.
Source : Forexlive