Afternoon Note
12 September 2023
Support & Resistance Levels
Data This Week
Market Highlights
Market Close
South Africa
Global Markets
Overnight Headlines
ZAR retreating after the Dollar rebound ahead of key data tomorrow.
Today’s Market & Resistance Levels
Data This Week
Monday
13H00 **SA MANUFACTURING PRODUCTION 2.3% (ACTUAL) VS 4.4% EXPECTED
17H00 US CONSUMER INFLATION EXPECTATIONS 3.4% F/CAST VS 3.5% PREVIOUS
Tuesday
08H00 UK unemployment 4.3% expected vs 4.2% previous
Wednesday
08H00 UK GDP MOM -0.2% VS 0.5% expected.
14h30 US INFLATION 3.6% expected vs 3.2% previous
14h30 US CORE INFLATION
Thursday
11h30 SA MINING PRODUCTION 0.5% VS 1.1% YOY PREVIOUS
14H30 US PPI 2.2% EXPECTED VS 2.4% YOY PREVIOUS
14H30 US RETAIL SALES 0.2% MOM VS 0.7% PREVIOUS
14H30 US JOBLESS CLAIMS 226K VS 216K PREVIOUS
Friday
16H00 US CONSUMER CONFIDENCE MICHIGAN 69.2 VS 69.5 PREVIOUS
Market Highlights
The Rand retreated from overnight highs of R18.82/$.
Early Joburg resulting range trading, with importers stepping in at the lower end of the range and exporters accepting levels above 18.9400.
For now, we anticipate a continuation of the range ahead of tomorrow’s key US CPI report.
Interest Rates:
The Dollar recovered in early morning trades and yields remain elevated after consumer inflation expectations surprised to the upside.
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- Adding to global yields and inflationary pressures were UK wages growing at a robust 7.8% YOY.
- It will probably add pressure to get inflation back down to the BOE’s 2% CPI level.
- Markets also watching the BOJ and JGB with the 10YT also drifting higher to 0.713%.
- Major stock market indices are lower in early trading with traders booking profits after a stellar performance for global markets.
- We also see risk assets lower with Gold lower to $1914/oz and the safe haven Dollar index higher at 104.85.
Technically we are trading below R19/$ and market action is expected to be subdued.
NB: Market remains as a SELL US DOLLARS on rallies (i.e., BUY ZAR).
BUT the Trade switched to Neutral (play the range) Long USD above R19.00/$ and short $ below R18.8200/$.
Market Close
DOW
+87 to 34,663
SP500
+29 to 4,487
NASDAQ
+156 to 15,438
Overnight Trading
Image: Trading Economics
South Africa
BEIDTBRIDGE
Beitbridge goes from the worst to the best border post in Africa.
The Beitbridge border between South Africa and Zimbabwe was not so long ago reviled as a place of suffering, with queues of truckers and travelers stretching for kilometers on either side waiting to cross.
Where trucks used to queue for kilometers on either side of the border with Zimbabwe, now they are cleared in two to three hours.
The importance of Beitbridge to the Southern African trade is enormous, with more than 500 trucks of 14,000 travelers crossing daily.
It’s a vital lifeline for exporters who must navigate two to three border crossings to reach the seaports of Durban or Maputo.
That journey has been the source of untold frustration among commercial operators and logistics companies.
Source: Moneyweb
ESKOM – DE RUYTER
The head of the Special Investigating Unit (SIU), Andy Mothibi, said despite possible good intentions, former Eskom CEO, André de Ruyter, made himself guilty of maladministration.
This by authorising a clandestine investigation into the operations of the power utility.
Mothibi told Parliament that De Ruyter should still be held accountable for his actions that were not in line with his office.
On Tuesday, Parliament’s Standing Committee on Public Accounts (Scopa) continued its probe into the corruption allegations made by De Ruyter.
Mothibi confirmed that De Ruyter kept the board in the dark about this probe.
Source: EWN
Global Markets
Stocks
US stock futures were slightly lower on Tuesday, with contracts on the three major averages losing about 0.1% each, as traders pause for breath following gains the day before prompted by a tech rally.
Traders also refrain from making big bets ahead of the highly anticipated CPI report due tomorrow.
On the corporate front, shares of Oracle sank about 10% in premarket trading after the company’s fiscal first-quarter revenue came lower than expected.
Apple shares were slightly higher only as the company prepares to launch new products at its annual event.
Source: Trading Economics
Bonds
The 10-year yield on the US Treasury note rose to the 4.3% mark, approaching the 15-year high of 4.34% touched on August 22nd.
The US economy’s resilience to higher rates aligned with bets that the Federal Reserve will leave borrowing costs at a restrictive territory for an extended period.
Markets show a broad consensus that the Fed will hold rates unchanged this month, but concerns of stubborn inflation pinned 45% of the market to bet on a final 25bps hike in November.
In the meantime, higher bond issuance and ample concern about unsustainable budget deficits in the US pressured bond prices in the secondary market.
Source: CNBC
Overnight Headlines
Asian Markets
Asian equities lower on Fed fears.
In Japan, the Nikkei 225 Index jumped 0.95% to close at 32,776 – recouping losses from the previous session and tracking gains on Wall Street overnight.
Traders citing positive corporate updates lifted shares of key technology names in the US.
A WSJ report over the weekend suggesting that Federal Reserve officials are growing less certain about the need for more interest rate hikes also boosted market sentiment.
Notable gains were seen from index heavyweights such as SoftBank Group (2%).
Source: Reuters
Energy
Oil prices heading towards $100/bl.
Brent crude futures firmed above $91/bl on Tuesday, holding near ten-month highs as investors cautiously awaited key monthly outlook reports for fresh insights into the oil market.
Both OPEC and the US EIA will release their monthly market reports on Tuesday.
Traders also look ahead to a slew of macroeconomic data later in the week that could signal whether the US and Europe will continue raising interest rates.
Meanwhile, oil prices remain supported by extended supply cuts from OPEC+ majors, Saudi Arabia and Russia.
Demand spike also on the back of improving economic outlook in the world’s two biggest oil consumers, the US and China.
Source: Gulf News
Metals
Precious metals drifting ahead of US CPI.
Gold traded lower to $1914/oz as investors cautiously awaited key US inflation readings that could influence the interest rate outlook.
The US consumer inflation report will be released on Wednesday and the producer inflation report is slated for Thursday.
The Federal Reserve is widely anticipated to hold interest rates steady at next week’s meeting, while bets for another rate increase in November are increasing.
Meanwhile, the metal found support recently amid a pullback in the dollar, as WSJ reported over the weekend that Fed officials are growing less certain about the need for more rate hikes.
The greenback also suffered a setback against the Japanese Yen after Bank of Japan Governor, Kazuo Ueda, indicated a possible end to its negative interest rate policy.
Source: KITCO
Currencies
The Dollar was higher in early trading.
The dollar index steadied around 104.5 on Tuesday as investors avoided making big bets ahead of a key US inflation reading that could influence the Federal Reserve’s next policy steps.
The annual inflation rate due on Wednesday is expected to accelerate to 3.6% in August due to energy cost pressures.
The US central bank is widely anticipated to hold interest rates steady at next week’s meeting, while bets for another rate increase in November are increasing.
The recovery in the Buck after the Dollar tumbled half a percent vs. the Japanese Yen after Bank of Japan Governor, Kazuo Ueda, indicated a possible end to its negative interest rate policy.
Source : Forexlive