Afternoon Note
24 August 2023
Support & Resistance Levels
Data This Week
Market Highlights
Market Close
South Africa
Global Markets
Overnight Headlines
Support & Resistance Levels
ZAR gains continued reaching R18.450/$ in late Wednesday trading before retracing gains.
Today’s Market Support and Resistance Levels:
Data This Week
Tuesday
Wednesday
Thursday
14H30 US DURABLE GOODS MOM -4% VS 4.7% PREVIOUS
14H30 US INITIAL JOBLESS CLAIMS 240K VS 239K
Friday
16H05 JACKSON HOLE – JEROME POWELL SPEECH
Saturday
JACKSON HOLE SYMPOSIUM
Market Highlights
Rand gains continued before reversing in early Johannesburg trading.
After reaching 18.4500 in overnight trading the local unit succumbing to a Dollar recovery.
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- The ZAR at 18.6500 at the time of writing after mixed data sent the Dollar higher.
- Weekly jobless claims lower than expected indicating a strong labour market and support for the Fed.
Markets pretty much trading every data point ahead of Jackson hole on Friday.
The US10yt yield also rebounding to 4.23% indicating a market that remains concerned about a hawkish Fed.
Market Close
DOW
+184 to 34.472
SP500
+48 at 4.436
NASDAQ
+215 at 15.308
Overnight Trading
image: Trading economics
South Africa
BRICS EXPANSION
BRICS to admit six new countries to bloc including Iran and Saudi Arabia.
Argentina, Ethiopia, Egypt and UAE also to join club of large emerging economies in major expansion.
The five BRICS nations – Brazil, Russia, India, China and South Africa – have announced the admission of six new countries from next year as the club of large and populous emerging economies seeks to reshape the global order.
Argentina, Ethiopia, Iran, Saudi Arabia, Egypt and the UAE are to become full members from 1 January 2024, the group announced at its summit in South Africa.
“This membership expansion is historic,” said the Chinese president, Xi Jinping.
Xi Jinping’s country is the most powerful in the group of non-western states that represents a quarter of the world’s economy.
“The expansion is also a new starting point for BRICS cooperation. It will bring new vigor to the BRICS cooperation mechanism and further strengthen the force for world peace and development.”
Source: Moneyweb.
RAMAPHOSA HAILED
President Cyril Ramaphosa was pivotal in bringing BRICS member states together to reach consensus on the expansion of the bloc.
Russian President Vladimir Putin hailed Ramaphosa for his “mastery”.
The expansion entails the addition of six new member countries.
President Cyril Ramaphosa was hailed for his “political mastery” after
guiding his BRICS counterparts on who should be allowed in an expanded version of the bloc.
Speaking virtually on Thursday, Russian President Vladimir Putin mentioned Ramaphosa’s sleek politics in his efforts to bring partners together to reach consensus.
“I would like to thank our SA friends for their efforts during our joint work. I would like to point that President Ramaphosa showed unique political mastery as we negotiated all the issues – even the BRICS expansion,” he said.
Putin said the matter of a common BRICS currency would be discussed further but emphasised that member states resolved to work on trading in local currencies.
Source: EWN.
Global Markets
Stocks rebound on better earnings from Nvidia.
US stock futures climbed higher on Thursday as an upbeat earnings report from Nvidia fueled bullish sentiment.
The Nasdaq 100 and S&P 500 futures jumped 0.9% and 0.5%, respectively, while Dow futures were flat.
In extended trading, Nvidia gained about 7% after the tech giant posted better-than-expected earnings and revenue for the second quarter.
The company also forecasted sales to jump 170% in the current quarter on the back of strong demand for artificial intelligence chips.
In regular trading on Wednesday, the Dow rose 0.54%, the S&P 500 gained 1.1% and the Nasdaq Composite advanced 1.59%.
Those moves came as weak PMI data in the US and Europe bolstered bets that major central banks would halt their interest rate hikes to avert a recession.
Investors now look ahead to the Jackson Hole meet for further rates guidance.
Yields continue to spike.
The yield on the 10-year US Treasury note retreated toward 4.2% after hitting a 15-year high of 4.342% on August 21st.
Cooler-than-expected PMI figures engaged bond buyers in the market to take further advantage of the recent slump in Treasury securities.
Prices , reflecting bets that fears of a slowing US economy will force the Fed to ease its hawkishness.
Additionally, risks remain for bond prices about higher long-dated debt issuance from the Treasury this month.
Source: CNBC.
Overnight Headlines
Asian Markets
Asian equities higher.
In Japan, the Nikkei 225 Index rose 0.87% to close at 32,287, rising for the fourth straight session and tracking gains on Wall Street overnight.
Treasury yields fell sharply after weak US PMI data raised hopes the Federal Reserve would end its tightening campaign to avert a recession.
Market sentiment was also lifted after chipmaker Nvidia posted solid second quarter results.
The company also raised third quarter sales guidance on strong demand for artificial intelligence chips.
Source : Reuters
Energy
Oil prices lower.
US WTI crude futures traded above $79/bl on Thursday, attempting to rebound after experiencing three consecutive sessions of losses.
Investors examining the balance between supply and demand dynamics in the oil market.
On the supply side, Iran’s oil minister said the country’s oil output will reach 3.4 million barrels per day by the end of September despite US sanctions.
Additionally, US authorities are reportedly considering a proposal to ease sanctions on Venezuela’s oil sector.
The US oil benchmark reached a nine-month high of $84 on August 9, driven by supply cuts implemented by Saudi Arabia and Russia.
However, since then, it has fallen by nearly 6%, influenced by a deteriorating economic situation in China, indications that US interest rates might need to remain elevated for an extended period, and disappointing economic data from Europe.
Source: Gulf News
Metals
Precious metals retracing gains.
Gold rose to around $1,920 an ounce on Thursday, before falling back towards $1910/oz.
The metal recovering further from five-month lows as softer-than-expected business activity data in major economies raised hopes that policymakers would halt their interest rate hikes to avert a recession.
Latest data showed that business activity in the US nearly stagnated in August, while those in the Euro zone and Britain remained contractionary.
Investors now look ahead to the annual symposium of central bankers at Jackson Hole, Wyoming where policymakers could outline the monetary outlook.
Markets have now scaled back bets on further tightening from the Federal Reserve and the European Central Bank.
Source: Kitco
Currencies
Dollar recovering.
The dollar index held below 103.5 on Thursday after retreating from over two-month highs in the previous session.
Investors cautiously awaited Federal Reserve Chair Jerome Powell’s address at the central bank’s annual symposium at Jackson Hole, Wyoming this week to guide the monetary policy outlook.
On Wednesday, the greenback came under pressure as Treasury yields fell sharply after data showed US business activity nearly stagnated in August, raising hopes the Fed would halt its interest rate hikes to avert a recession.
S&P Global said its flash US Composite PMI declined to 50.4 in August. Business activity in the Euro Area and Britain also contracted this month, clouding the economic and interest rate outlook globally.
Source : Forexlive