Afternoon Note
19 September 2023
Support & Resistance Levels
Data This Week
Market Highlights
Market Close
South Africa
Global Markets
Overnight Headlines
ZAR drifting stronger to R18.9300/$ in afternoon trading as traders continue to play the range.
Today’s Market & Resistance Levels
Data This Week
Monday
Nothing of significance
Tuesday
11H00 EU INFLATION 5.3% EXPECTED YOY
14H30 US BUILDING PERMITS 1.44MM
Wednesday
08H00 UK INFLATION 7.1% CPI YOY EXPECTED
10H00 SA INFLATION 4.9% EXPECTED VS 4.7 PREVIOUS
13H00 SA RETAIL SALES -0.5% MOM EXPECTED VS +0.2% PREVIOUS
20H00 US FED FOMC RATE DECISION – UNCHANGED EXPECTED
20H30 US FED PRESS CONFERENCE
Thursday
15H00 SA SARB MPC UNCHANGED REPO AT 8.25%
16H00 ECB LAGARDE SPEAKS.
Friday
01H30 JP INFLATION AT 13H30
05H00 JP BOJ DECISION
Market Highlights
The recovering in mid-afternoon trading to reach R18.9300 after reaching R19.0800/$ in overnight trading.
JHB interbank traders all happy to play the range and fill client orders with very little appetite to assume direction risk ahead of key central bank policy actions.
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- This morning we had a slight decline in EU inflation print at 5.2% YOY.
- The data important after the ECB announced it was at the end of its hiking cycle.
- Stocks recovering in morning European trading , with the SP500 futures erasing overnight losses.
The benchmark indices all higher as traders cover risk positions.
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- Gold higher at $1935/oz, the Dollar 105.10.
- Oil prices remain higher with Brent topping $95/bl.
The yield on the US 10-year Treasury increased to 4.33%. The benchmark closing in on the highest level in 16 years.
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- Further evidence of resilience in the US economy strengthened bets that the Federal Reserve will keep borrowing costs restrictive for a prolonged period.
- The market is currently factoring in a 99% likelihood that the Fed will maintain its current interest rates this week.
- Also Fed officials have not ruled out the possibility of a rate increase later in the year.
Buy USDZAR on dips, add through R19.10/$
Market Close
DOW
+6 to 34,624
SP500
+3 to 4,453
NASDAQ
+0 to 15,228
Overnight Trading
Image: Trading Economics
South Africa
WATER CRISES
Three hospitals in Gauteng are still not out of the woods in terms of water shortages.
This weekend taps ran dry at the Rahima Moosa Mother and Child, Helen Joseph and Pholosong hospitals.
On Sunday, the provincial Department of Health said water was restored at two of the facilities in Johannesburg, but Pholosong still had no supply.
But department now says the supply problem is not yet completely resolved.
While the Helen Joseph hospital is receiving water supply from an alternative line in Brixton, the Rahima Moosa Mother and Child and Pholosong hospitals are relying on roving water tankers.
Source: EWN
TSHWANE STRIKES
The Gauteng Legislature has called on the municipal workers’ union and the City of Tshwane to submit a mediation process over the ongoing wage increase protest in the capital.
However, Mayor Ciliers Brink doesn’t think this will fly.
The City of Tshwane says there is no point in negotiating with unionised workers, as it does not have the money for salary increases.
Over the past two months, Tshwane municipal employees affiliated with the SAMWU have been engaged in a disruptive strike over the city’s decision to not effect wage increases this financial year.
Following several incidents of municipal trucks being torched, the Gauteng Legislature has called on the union and the capital city to submit to a mediation process.
Source: Moneyweb
Global Markets
Stocks
US stock futures held steady on Tuesday as investors avoided making big bets ahead of the Federal Reserve’s two-day policy meeting.
US policymakers are widely expected to keep interest rates unchanged on Wednesday.
In regular trading on Monday, the Dow rose 0.02%, the S&P 500 gained 0.07% and the Nasdaq inched up 0.01%, with traders getting chopped around amid a central bank-heavy week.
Among individual stocks, Tesla fell 3.3% after Goldman Sachs lowered its 2023 and 2024 profit outlook.
Meanwhile, Apple gained 1.7% after preorder news indicated a strong demand for iPhone 15 Pro handsets.
Source: Trading Economics
Bonds
The yield on the US 10-year Treasury moved to 4.33%, closing in on the highest level in 16 years.
Traders citing further evidence of resilience in the US economy strengthened bets that the Federal Reserve will keep borrowing costs restrictive for a prolonged period.
The market is currently factoring in a 99% likelihood that the Fed will maintain its current interest rates this week, and Fed officials have not ruled out the possibility of a rate increase later in the year.
Producer inflation in the United States sharply overshot expectations in August, magnifying the hotter-than-expected CPI report to erase last month’s perceptions of disinflation.
Additionally, strong retail sales underscored consumer adaptability, and unemployment claims held close to multi-month lows.
Source: CNBC
Overnight Headlines
Asian Markets
Stocks lower after RBA minutes and FED rate concerns.
In Japan, the Nikkei 225 Index fell 0.87% to close at 33,243 retreating from 11-week highs as investors turned cautious ahead of key central bank events this week.
The Bank of Japan will announce its monetary policy decision on Friday, where investors will focus on clues about a possible end to ultra-loose monetary settings.
The US Federal Reserve and the Bank of England will also decide on interest rates on Wednesday and Thursday, respectively.
Technology stocks led the decline, with notable losses from SoftBank Group (-3.3%).
Source: Reuters
Energy
Oil keeps on rising.
US WTI crude rose for a fourth straight session to above $92.6/BL, the highest level in over a year amid expectations of a widening market deficit in the fourth quarter due to dwindling supply.
The US EIA said on Monday that US oil output from top shale-producing regions is on track to decline for the third straight month to 9.393 million barrels per day in October, the lowest since May.
Meanwhile, Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman defended OPEC+ moves to curtail oil supply on Monda.
He said, markets were being guided to limit volatility and warning about global economic and demand uncertainties.
Earlier this month, Saudi Arabia and Russia announced that they would extend a combined 1.3 million bpd of supply cuts to the end of the year.
Source: Gulf News
Metals
Precious drifting higher.
Gold climbed toward $1,930/oz after the ECB called a halt on its rate hiking cycle.
The US Federal Reserve is also expected to hold interest rates steady on Wednesday, with investors focus on its inflation outlook and next policy steps.
Traders also look ahead to S&P Global PMI figures in the US and several housing indicators.
The BOE and the BOJ will decide on monetary policy this week as well, while the RBA will release minutes of its September meeting on Tuesday.
Last week, Chinese gold prices hit record highs as consumers rushed for the safe-haven asset to hedge against a weakening yuan.
Source: KITCO
Currencies
Dollar softer in early trading.
The dollar index fell below 105.000 on Tuesday, hovering near its highest levels in six months as investors braced for the Federal Reserve’s policy decision this week.
The US central bank is widely expected to hold interest rates steady on Wednesday, while investors will focus on the Fed’s outlook on inflation and its next policy steps.
Last week, mostly positive US economic data raised hopes that the Fed could engineer a soft landing even if it keeps interest rates higher for longer.
Investors now look ahead to S&P Global PMI figures in the US, as well as several housing indicators.
Markets also await key interest rate decisions from the SARB BOE and BOJ.
The dollar held steady against most major currencies, but strengthened slightly against the Japanese yen and the Chinese yuan.
Source: Forexlive